Final answer:
The operating income will increase by $6,000 with a $20,000 revenue increase since the firm has a contribution margin ratio of 30%. Fixed expenses stay constant, and the contribution margin ratio does not change with revenue changes, making option a) the correct answer.
Step-by-step explanation:
The question involves calculating the effect of an increase in revenues on the operating income of a firm, which is a Business concept, more specifically related to management accounting.
Given that the firm has a contribution margin ratio of 30%, for every additional dollar in revenue, $0.30 will contribute to covering the fixed expenses and then to profit. With an increase in revenues of $20,000, the increase in contribution to cover fixed expenses and profit will be 30% of $20,000, which is $6,000.
Since fixed expenses remain unchanged in this scenario, an addition of $6,000 in operating income will result from the $20,000 increase in revenue. Therefore, the correct answer is: a) Operating income will increase by $6,000.
The contribution margin ratio is a percentage and it does not change with changes in revenue as it is a ratio of contribution over sales. Fixed expenses are not affected by revenue changes unless specified. Therefore, options b), c), and d) are incorrect in this scenario.