Hong Kong Ltd has provided the following data for the current fiscal period: Sales 5,000 units Selling price £80 Variable cost per unit £55 Fixed cost £25,000 The company’s CEO believes that if the sales volume will remain constant next year, the contribution margin per unit can be increased by 20%, and total fixed cost can be reduced by 10%, in which case the operating profit will: a. Increase by £22,500 b. Decrease by £22,500 c. Decrease by £27,500 d. Increase by £27,500

Hong Kong Ltd has provided the following data for the current fiscal period: Sales 5,000 units Selling price £80 Variable cost per unit £55 Fixed cost £25,000 The company’s CEO believes that if the sales volume will remain constant next year, the contribution margin per unit can be increased by 20%, and total fixed cost can be reduced by 10%, in which case the operating profit will: a. Increase by £22,500 b. Decrease by £22,500 c. Decrease by £27,500 d. Increase by £27,500

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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