Abrams Co Has Total Fixed Costs of $240,000 and a Contribution

question 61

Essay

Abrams Co. has total fixed costs of $240,000 and a contribution margin ratio of 40%. If rent expense increases by $5,000, how much will sales have to increase to cover this increase in costs?

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Definitions:

Exhaustion Stage

The final phase of the General Adaptation Syndrome, characterized by the body's depletion of physical and psychological resources following prolonged stress.

Autonomic

Relating to the autonomic nervous system, which controls involuntary actions of the body such as heart rate and digestion.

Sympathetic

Relating to the sympathetic nervous system, which triggers the body's rapid involuntary response to dangerous or stressful situations; also means showing understanding or compassion toward others.

Alarm Phase

The initial phase of the stress response, where the body undergoes various physiological changes to combat stress.