As an investor, you want to determine if the ACME corporation is managing its overhead costs and production costs well. Given the following situations, determine the change in operating incomefor each $($please show your work for credit$).$

For the following questions assume the company sells its products for $$4$ each.

$1.$ Calculate the change in operating income if the contribution margin ratio is $35\%$ and there is a $10,000$ unit increase in sales.

$2.$ Calculate the change in operating income if the unit contribution margin ratio is $$2\mathrm{.}10$ and there is an increase of $$20,000$ in sales.

$3.$ Calculate the change in operating income if the contribution margin ratio is $30\%$ and there is an increase in sales of $$30,000.$

$4.$ Why do investors prefer that ACME has increasing operating income?

Answer rating: 100% (QA)

Lets break down each scenario and calculate the change in operating income step by step 1 Calculate the change in operating income if the contribution ... View the full answer