Incorrect answer Your answer is incorrect Try again Riverbed

Incorrect answer. Your answer is incorrect. Try again. Riverbed offers computer consulting, training, and repair services. For the most recent fiscal year, profit was $316,100, as follows: Consulting Training Repair Total Sales $590,200 $574,100 $342,900 $1,507,200 Less variable costs: Salaries 322,200 203,000 235,700 760,900 Supplies/parts 24,100 39,400 68,500 132,000 Other 1,300 2,400 4,800 8,500 Contribution margin $242,600 $329,300 $33,900 605,800 Less common fixed costs: Rent 58,200 Owner’s salary 209,200 Utilities 11,700 Other 10,600 Profit $316,100 Linda O’Flaherty, the owner of Riverbed, believes that in the coming year, she can increase sales by 16 percent. Assuming the current mix of services, what will be the percentage increase in profit associated with a 16 percent increase in sales? (Round weighted-average contribution margin ratio to 6 decimal places, e.g. 0.124547 and final answer to 2 decimal places, e.g. 15.25%.) Increase in profit Entry field with incorrect answer 37.06 %

Solution

Riverbed company Services Consulting Training Repair Total Sales 590,200 574,100 342,900 1,507,200 Less: Var costs Salaries 322,200 203,000 235,700 760,900 Supplies 24,100 39,400 68,500 132,000 Others 1,300 2,400 4,800 8,500 Contribution 242,600 329,300 33,900 605,800 Fixed costs Rent 58,200 Utility 209,200 Others 10,600 Profit 316,100 When sales are increased by 16%: Riverbed company Services Consulting Training Repair Total Sales 684,632 665,956 397,764 1,748,352 Less: Var costs Salaries 322,200 203,000 235,700 760,900 Supplies 24,100 39,400 68,500 132,000 Others 1,300 2,400 4,800 8,500 Contribution 337,032 421,156 88,764 846,952 Increase in contibution 241,152 39.807197 Fixed costs Rent 58,200 Utility 209,200 Others 10,600 Profit 568,952 Increase in profit 252,852 79.99