Answer:
Results are below.
Explanation:
Giving the following information:
Sales in units= 42,000
Total sales= $297,000
Total variable expenses= $222,750
Total fixed expenses= $36,900
<u>To calculate the contribution margin ratio, we need to use the following formula:</u>
contribution margin ratio= (sales - total variable cost) / sales
contribution margin ratio= (297,000 - 222,750) / 297,000
contribution margin ratio= 0.25
<u>Now, the effect on the income of an increase in sales:</u>
Effect on income= contribution margin ratio*increase in sales
Effect on income= 0.25*1,800
Effect on income= $450 increase