Schister Systems uses the following data in its Cost-Volume-Profit analyses:
What is total contribution margin if sales volume increases by 20%?
A) $80,000
B) $158,400
C) $200,000
D) $144,000

Question

Schister Systems uses the following data in its Cost-Volume-Profit analyses:
 What is total contribution margin if sales volume increases by 20%?
A) $80,000 
B) $158,400 
C) $200,000 
D) $144,000

Quizplus · Accepted Answer

CM ratio = Contribution margin ÷ Sales = $120,000 ÷ $400,000 = 0.30
Contribution margin = CM ratio × Sales
Contribution margin = 0.30 × (1.2 × $400,000) = $144,000

Schister Systems Uses the Following Data in Its Cost-Volume-Profit Analyses