A retail company has a coverage ratio of 20%. All else being equal, show using a calculation how the contribution ratio is affected by a 10% increase in the company's variable costs.

Calculation is based on normal production and sales per period of 900 units. The fasting costs are operating independent within maximum capacity (1,000 units per period).

Sales price per unit Direct material costs (DM) Direct payroll costs (DL) Indirect variable costs in manufacturing department Indirect fixed costs in the manufacturing department Sum tilvirkningskostnader Indirekte variable kostnader i salgsavdelingen Indirekte faste kostnader i salgsavdelingen Self-cost Merit 75 000 22 000 16 000 6 000 8 000 52 000 4 000 7 000 63 000 12 000