A Company Has Provided the Following Data If the Sales Volume Decreases by 25%, the Variable Cost

question 60

Multiple Choice

A company has provided the following data:
$\begin{array}{llr}\text { Sales } & 3,000 \text { Units } \\\text { Sales price } & \$ 7 \text { per unit } \\\text { Variable cost } & \$ 50 \text { per unit } \\\text { Fixed cost } & \$ 25,000\end{array}$
If the sales volume decreases by 25%, the variable cost per unit increases by 15%, and all other factors remain the same, operating profit will:

• A) decrease by $31,875.
• B) decrease by $15,000.
• C) increase by $20,625.
• D) decrease by $3,125.

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Definitions:

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