Computing and Using the CM Ratio [LO3] Last month when Harrison Creations, Inc., sold 40,000 units, total

Question:

Computing and Using the CM Ratio [LO3]

Last month when Harrison Creations, Inc., sold 40,000 units, total sales were $300,000, total variable expenses were $240,000, and fixed expenses were $45,000.

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 $1,500.

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