Question 2:

Pringle Company distributes a single product, the companys sale and expenses for a recent month follow:

Total Per Unite

Sales . 225,000 75

Variable expenses 135,000 45

Contribution margin 90,000 30

Fixed Expenses ... 75,000

Net Operating Income 15,000

The company is selling 3,000 units per month.

Required:

Q1: What is the companys CM ratio ?

Q2: how much would you expect monthly net operating income increase if the monthly sales increase by $ 120,000 and there is no change in fixed expenses ?