You Have Been Provided with the Following Information: If Sales

question 80

Multiple Choice

You have been provided with the following information: If sales decrease by 500 units,how much will fixed expenses have to be reduced by to maintain the current operating profit of $6,000?

• A)$9,000.
• B)$7,500.
• C)$6,000.
• D)$3,000.

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Definitions:

Interrelationships

Mutual or reciprocal relations between components within a system, indicating how they influence or interact with each other.

Cost Method

An accounting method used for recording investments, where the investment is recorded at its acquisition cost without recognizing periodic income but dividends received are recorded as income.

Acquisition

The process of obtaining control of another company, either by purchasing its shares, assets, or both, with the aim of expanding or diversifying operations.

Dividends

Payments made by a corporation to its shareholder members from the company's earnings.