Part 1

If sales are $820,000, variable costs are 55% of sales, and operating income is $260,000, what is the contribution margin ratio? a. 55% b. 32% c. 45% d. 62%

Part 2

A firm operated at 90% of capacity for the past year, during which fixed costs were $420,000, variable costs were 40% of sales, and sales were $1,000,000. Operating profit was a. $420,000 b. $180,000 c. $980,000 d. $1,080,000

Part 3

Variable costs as a percentage of sales for Lemon Inc. are 80%, current sales are $600,000, and fixed costs are $130,000. How much will operating income change if sales increase by $40,000? $8,000 decrease $30,000 increase $8,000 increase $30,000 decrease