A Firm's Products Have an Average Contribution Margin Ratio of 40

question 54

Multiple Choice

A firm's products have an average contribution margin ratio of 40%, which will be maintained for the next month even though fixed expenses are expected to rise by $20,000.In order to keep operating income for the month from being affected, revenues will have to increase by:

• A)$8,000.
• B)$12,000.
• C)$20,000.
• D)$50,000.

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Definitions:

Axon

An extended, slim protrusion from a neuron, or nerve cell, generally responsible for conducting electrical stimuli away from the main body of the cell.

Mitochondrion

An organelle found in large numbers in most cells, in which the biochemical processes of respiration and energy production occur.

Endoplasmic Reticulum

A network of membranes within the cytoplasm of eukaryotic cells involved in protein and lipid synthesis, and calcium storage.

Myelin

Myelin is a fatty substance that forms a sheath around the axons of neurons, facilitating faster transmission of electrical impulses along the nerve cells.