The addition of a specified target operating income to contribution margin analysis has the same effect on required sales in units as increasing fixed expenses.

Question

Quizplus · Accepted Answer

This is because the addition of a target operating income to contribution margin analysis increases the required contribution margin, which can only be achieved by either increasing sales revenue or decreasing variable expenses. This is similar to increasing fixed expenses, which would increase the required contribution margin as well.

The Addition of a Specified Target Operating Income to Contribution