The Controller of Nationwide Bicycle Parts Is Evaluating the Sensitivity

question 83

Short Answer

The controller of Nationwide Bicycle Parts is evaluating the sensitivity of changes in profit as it relates to proposed adjustments to sales volume and margin of safety. If sales volume is estimated to decrease by 10%, the contribution margin ratio is 35%, and the margin of safety is 25%, by how much will profit before taxes decrease? a. 40%
B) 250%
C) 28.5%
D) 2.5%

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Definitions:

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