Contribution margin minus fixed costs equals operating profit. If the contribution margin increases while the fixed costs remain the same, operating profit will not decrease.
Contribution margin minus fixed costs equals operating profit. If the contribution margin increases while the fixed costs remain the same, operating profit cannot remain unchanged.
Contribution margin minus fixed costs equals operating profit. If the contribution margin is $4,000 and fixed costs are $1,000, operating profit is $3,000. If the contribution margin increases by $1,000 to $5,000 and fixed costs remain at $1,000, operating profit will become $4,000, a $1,000 increase.
Contribution margin minus fixed costs equals operating profit. If the contribution margin increases while the fixed costs remain the same, operating profit cannot increase by more than the contribution margin increase.
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