Homework Help is Here – Start Your Trial Now!
Business
Accounting
A company has provided the following data: Sales 5,000 units Sales price $100 per unit Variable cost $70 per unit Fixed cost $30,000 If the sales volume decreased by 20%, variable costs increase by 10%, and all factors remain the same, what will happen to operating income? a. Decrease by $58,000. b. Decrease by $35,000. c. Decrease by $75,00. d. No change in operating income.

A company has provided the following data: Sales 5,000 units Sales price $100 per unit Variable cost $70 per unit Fixed cost $30,000 If the sales volume decreased by 20%, variable costs increase by 10%, and all factors remain the same, what will happen to operating income? a. Decrease by $58,000. b. Decrease by $35,000. c. Decrease by $75,00. d. No change in operating income.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
See similar textbooks
icon
Related questions
Question

Vinubhai 

A company has provided the following data: Sales 5,000 units Sales price $100 per unit Variable cost $70 per unit Fixed cost $30,000 If the sales volume decreased by 20%, variable costs increase by 10%, and all factors remain the same, what will happen to operating income? a. Decrease by $58,000. b. Decrease by $35,000. c. Decrease by $75,00. d. No change in operating income.
Transcribed Image Text:A company has provided the following data: Sales 5,000 units Sales price $100 per unit Variable cost $70 per unit Fixed cost $30,000 If the sales volume decreased by 20%, variable costs increase by 10%, and all factors remain the same, what will happen to operating income? a. Decrease by $58,000. b. Decrease by $35,000. c. Decrease by $75,00. d. No change in operating income.
Expert Solution
steps

Step by step

Solved in 3 steps

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education
SEE MORE TEXTBOOKS