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:

Isobutylene

A volatile, flammable, and colorless gas that is a simple alkene with the chemical formula C4H8, used in the production of various polymers.

Polyisobutylene

A synthetic rubber, or elastomer, made from the polymerization of isobutylene, used in a variety of applications including sealants and adhesives.

Cyclic Product

A chemical compound that forms a ring structure during a chemical reaction.

Ring Closing Metathesis

A form of metathesis reaction that forms cyclic compounds by the rearrangement of carbon-carbon double bonds.