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Problem 1: Raymond & Sons generates an average contribution margin ratio of 45% on its sales. Management estimates that by spending $3,500 more per month to rent additional facilities, the business will be able to increase operating income by $10,000 per month. Management must feel that the additional facilities will increase monthly sales volume (in dollars) by:
Multiple Choice Option 1: $4,725. Option 2: $30,000. Option 3: $13,500. Option 4: $8,775.
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