Business, 24.05.2021 14:00, jakaylathomas11
In Year 1, a company sold 4,000 units each of Product A and Product B. For products A and B, the selling prices were $10 and $15, respectively. Also, the variable expenses for products A and B amounted to $8 and $10, respectively. The fixed expenses of the company amounted to $20,000. The company's average contribution margin ratio was 0.28, and the operating income was $8,000. In Year 2, the company was able to sell 6,000 units of Product A and 2,000 units of Product B. There was no change in the selling price, variable expenses, and the fixed expenses in Year 2. Based on the scenario, identify a true statement about the company's operating income in Year 2.
a. The company's average contribution margin ratio increased by 0.40 in Year 2.
b. The company's average contribution margin ratio decreased by 0.40 in Year 2.
c. The company's average contribution margin ratio decreased by 0.04 in Year 2.
d. The company's average contribution margin ratio increased by 0.04 in Year 2
Answers: 2
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In Year 1, a company sold 4,000 units each of Product A and Product B. For products A and B, the sel...
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