A Company with Sales of $80,000 and Variable Expenses of $40,000

question 123

True/False

A company with sales of $80,000 and variable expenses of $40,000 should spend $12,000 on increased advertising,if the increased advertising will increase sales by $22,000.
CM ratio = 50% so incremental CM = 22,000 *.5 which is less than $12,000.

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Definitions:

Test Category

The classification of an examination or assessment into a specific group based on its nature, purpose, or content.

Bennett Test

A mechanical comprehension test, often used for employment screening, that assesses an individual's ability to understand mechanical concepts.

Mechanical Comprehension

The ability to understand and apply mechanical concepts and principles to solve problems.

Test Category

A classification or grouping of tests based on their similar characteristics or the purpose they serve.