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Last month when Holiday Creations, Inc., sold 40,000 units, total sales were $294,000, total variable expenses were $238,140, and fixed expenses were $39,400. 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 $2,700?

Last month when Holiday Creations, Inc., sold 40,000 units, total sales were $294,000, total variable expenses were $238,140, and fixed expenses were $39,400. 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 $2,700?

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Last month when Holiday Creations, Inc., sold 40,000 units, total sales were $294,000, total variable expenses were $238,140, and fixed expenses were $39,400. 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 $2,700?
Transcribed Image Text:Last month when Holiday Creations, Inc., sold 40,000 units, total sales were $294,000, total variable expenses were $238,140, and fixed expenses were $39,400. 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 $2,700?
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