Answer:
Effect on income= $18,600 increase
Explanation:
Giving the following information:
Markham Company has a contribution margin ratio of 22%.
The company is considering a proposal that will increase sales by $180,000.
Increase in total fixed costs= $21,000
To calculate the effect on income, we need to determine the effect of the increase in sales and deduct the fixed costs:
Increase on income= 180,000*0.22= 39,600
Increase on fixed costs= (21,000)
Effect on income= $18,600
