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Question(s) / Instruction(s):

A firm has revenues of $120,000, a contribution margin ratio of 30%, and fixed expenses that total $56,000. If revenues increase by $20,000, then:

a)            operating income will increase by $6000.

b)            operating income will be 0.

c)            fixed expenses will increase $8000.

d)            the contribution margin ratio will increase by 1/8.

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