Question

Mojo’s Coffee Cart currently has a contribution margin ratio of 55%. The business operates in a resort area and expects a decline in revenue of $4,500 per month during the off season. Compute the decrease in net income that the company should anticipate in the off season, assuming that monthly fixed costs and the contribution margin ratio will remain unchanged.

Answer 1

Compute the decrease in net income that the company should anticipate in the off season

Net income decrease in $2475

Step-by-step explanation:

contribution margin=price-associate cost

55%=100%-45%

Revenue 4500 100%

Cost 2025 45%

Contribution margin 2475 55%