Question
Ivanhoeoffers computer consulting, training, and repair services. For the most recent fiscal year, profit was $322,100, as follows: Consulting Training Repair Total Sales$589,500$566,500$340,700$1,496,700Less variable costs:Salaries298,400228,800219,800747,000Supplies/parts24,70038,10075,000137,800Other1,2003,0005,1009,300Contribution
Ivanhoeoffers computer consulting, training, and repair services. For the most recent fiscal year, profit was $322,100, as follows:
Consulting
Training
Repair
Total
Sales$589,500$566,500$340,700$1,496,700Less variable costs:Salaries298,400228,800219,800747,000Supplies/parts24,70038,10075,000137,800Other1,2003,0005,1009,300Contribution margin$265,200$296,600$40,800602,600Less common fixed costs:Rent55,900Owner's salary201,700Utilities12,400Other10,500Profit$322,100
Linda O'Flaherty, the owner ofIvanhoe, believes that in the coming year, she can increase sales by10percent. Assuming the current mix of services, what will be the percentage increase in profit associated with a10percent increase in sales?(Round weighted-average contribution margin ratio to 6 decimal places, e.g. 0.124547 and final answer to 2 decimal places, e.g. 15.25%.)
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