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The Following Income Statements Are Provided for Two Companies Operating

Question 40

Multiple Choice

The following income statements are provided for two companies operating in the same industry: RevenueVariable costs Contribution margin Fixed costsNet income Felix Company $200,000(25,000) 175,000(70,000) $105,000Jinx Company$200,000(70,000) 130,000(25,000) $105,000\begin{array}{c}\begin{array}{l}\\\text {Revenue}\\ \text {Variable costs}\\\text { Contribution margin }\\\text {Fixed costs}\\ \text {Net income}\\\end{array} \begin{array}{lll}\text { Felix Company }\\\$200,000\\(25,000) \\175,000\\(70,000) \\\$105,000 \end{array}\begin{array}{c}\text {Jinx Company}\\\$ 200,000 \\ (70,000) \\130,000 \\ (25,000) \\ \$ 10 5,000\end{array}\end{array}
Assuming sales increase by $1,000,select the correct statement from the following:


A) Felix's net income will be more than Jinx's.
B) Only Felix will experience an increase in profit.
C) Felix's net income will increase by $250.
D) Jinx's net income will increase by 6%.

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