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Information concerning Alpha Companys product is as follows: Sales $300,000 Variable costs $240,000 Fixed costs $40,000 If Alpha increased sales by 20%, what should be
Information concerning Alpha Companys product is as follows: Sales $300,000 Variable costs $240,000 Fixed costs $40,000 If Alpha increased sales by 20%, what should be the new operating income?
The correct answer is 32,000. But why is it not 360,000-240,000-40,000 = 80,000? Why do you have to find the CM ratio instead?
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