A company has provided the following data: Sales 2,000 units Sales price $50/unit Variable cost $30/unit Fixed cost $25,000 If the variable cost per unit is decreased by 10%, the total fixed cost is increased by 20%, and all other factors remain the same, what will be the effect on operating income? a) It will decrease by $5,000 b) It will decrease by $1,000 c) It will increase by $6,000 d) It will increase by $1,000

A company has provided the following data: Sales 2,000 units Sales price $50/unit Variable cost $30/unit Fixed cost $25,000 If the variable cost per unit is decreased by 10%, the total fixed cost is increased by 20%, and all other factors remain the same, what will be the effect on operating income? a) It will decrease by $5,000 b) It will decrease by $1,000 c) It will increase by $6,000 d) It will increase by $1,000

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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