Moylan Company has provided the following information: $\begin{array}{|l|r|}
\hline\text { Sales } & \$ 777,000 \
\hline \text { Variable expenses } & 504,000 \
\hline \text { Fixed expenses } & 212,000 \
\hline
\end{array}$ Which of the following statements is true, if the sales volume increases by 10%?

Question

Quizplus · Accepted Answer

When sales volume increases by 10%, sales will be $777,000 * 1.10 = $854,700. Variable expenses will also increase by 10% to $504,000 * 1.10 = $554,400. The contribution margin will be $854,700 - $554,400 = $300,300. The original contribution margin was $777,000 - $504,000 = $273,000. The increase in contribution margin is $300,300 - $273,000 = $27,300, which is the increase in operating income since fixed expenses remain unchanged.

Moylan Company Has Provided the Following Information Which of the Following Statements Is True, If the Sales