The Monterra Company Provided the Following Information $\begin{array}{ll}\text { Sales } & \$ 500,000 \\\text { Variable costs } & \$ 100,000 \\\text { Fixed costs } & \$ 200,000\end{array}$

question 26

Essay

The Monterra Company provided the following information: $\begin{array}{ll}\text { Sales } & \$ 500,000 \\\text { Variable costs } & \$ 100,000 \\\text { Fixed costs } & \$ 200,000\end{array}$
A. What is the contribution margin ratio?
B. What is the level of sales in dollars necessary to generate a profit of $40,000?
C. What is the contribution margin ratio if the sales price is increased by 10%?
D. Using the information in part C, what level of sales in dollars is necessary to generate a profit of $40,000?

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