How Much Does Each Additional Sales Dollar Contribute Toward Profit

question 77

Multiple Choice

How much does each additional sales dollar contribute toward profit for a firm with $5 million break-even level of revenues and $1.5 million in fixed costs including depreciation? (use the values in dollar)

• A)$0.30
• B)$0.33
• C)$0.50
• D)$0.67

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Definitions:

Initiation Fees

Fees charged to initiate a service or to join a club or organization, often as a one-time cost for new members.

Endowment Contributions

Donations endowed to an institution meant for investment to provide a continuous source of funding.

Externally Restricted

Pertains to funds or resources that are subject to restrictions regarding their use, imposed by external parties or agreements.

Deferral Method

An accounting method whereby revenue or expenses are postponed to future accounting periods to match revenues with expenses in the period in which they occur.