Exercise 2-4 (Algo) Computing and Using the CM Ratio [LO2-3] Last month when Holiday Creations, Inc., sold 36,000 units, total sales were $297,000, total variable expenses were $240,570, and fixed expenses were $39,500. Required: 1. What is the company's contribution margin (CM) ratio? 2. What is the estimated change in the company's net operating income if it can increase total sales by $2,100? (Do not round intermediate calculations.) 1. Contribution margin ratio Estimated change in net operating 2. income %
Exercise 2-4 (Algo) Computing and Using the CM Ratio [LO2-3] Last month when Holiday Creations, Inc., sold 36,000 units, total sales were $297,000, total variable expenses were $240,570, and fixed expenses were $39,500. Required: 1. What is the company's contribution margin (CM) ratio? 2. What is the estimated change in the company's net operating income if it can increase total sales by $2,100? (Do not round intermediate calculations.) 1. Contribution margin ratio Estimated change in net operating 2. income %
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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![Exercise 2-4 (Algo) Computing and Using the CM Ratio [LO2-3]
Last month when Holiday Creations, Inc., sold 36,000 units, total sales were $297,000, total variable expenses were $240,570, and
fixed expenses were $39,500.
Required:
1. What is the company's contribution margin (CM) ratio?
2. What is the estimated change in the company's net operating income if it can increase total sales by $2,100? (Do not round
intermediate calculations.)
1. Contribution margin ratio
Estimated change in net operating
2.
income
%](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fb0c53c3c-d25b-4f46-ae7f-d9559756d1d4%2F390e2f37-cbb1-4e11-b7c2-d9bdd7df7655%2Ffqmp5t_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Exercise 2-4 (Algo) Computing and Using the CM Ratio [LO2-3]
Last month when Holiday Creations, Inc., sold 36,000 units, total sales were $297,000, total variable expenses were $240,570, and
fixed expenses were $39,500.
Required:
1. What is the company's contribution margin (CM) ratio?
2. What is the estimated change in the company's net operating income if it can increase total sales by $2,100? (Do not round
intermediate calculations.)
1. Contribution margin ratio
Estimated change in net operating
2.
income
%
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