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Contribution Margin Ratio a. Young Company budgets sales of $1,110,000, fixed costs of $84,900, and variable costs of $377,40

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Answer #1

a. Contribution margin ratio = (Sales - Variable costs) / Sales * 100

= ($1,110,000 - $377,400) / $1,110,000 * 100

= 66%

b. Operating income = (Sales * Contribution margin ratio) - Fixed costs

= ($689,000 * 69%) - $356,560

= $118,850

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