Computing and Using the CM Ratio
Last month when Holiday Creations, Inc., sold 50,000 units, total sales were $200,000, total variable expenses were $120,000, and total fixed expenses were $65,000.
Required:
1. What is the company's contribution margin (CM) ratio?
2. Estimate the change in the company's net operating income if it were to increase its total sales by $1,000.