Raymond & Sons Generates an Average Contribution Margin Ratio of 45

question 116

Multiple Choice

Raymond & Sons generates an average contribution margin ratio of 45% on its sales.Management estimates that by spending $3,500 more per month to rent additional facilities,the business will be able to increase operating income by $10,000 per month.Management must feel that the additional facilities will increase monthly sales volume (in dollars) by:

• A)$4,725.
• B)$8,775.
• C)$13,500.
• D)$30,000.

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Definitions:

Cost of Goods Manufactured

The cost of goods manufactured totals the production costs for goods that were completed in a given accounting period, including labor, materials, and overhead.

Income Statement

A financial statement that reports a company's financial performance over a specific accounting period, detailing revenues, expenses, and profit or loss.

Manufacturing Company

A company engaged in the conversion of raw materials into finished goods, utilizing labor, machinery, and equipment.

Inventoriable Costs

Costs associated with obtaining or manufacturing products intended for sale, including materials, labor, and certain overhead expenses.