Reference: 08-14
Wright Corporation's Contribution Format Income Statement for Last

question 41

Multiple Choice

Reference: 08-14
Wright Corporation's contribution format income statement for last month appears below. $$\begin{array} { | l | c | } \hline \text { Sales } & \$ 45,000 \\\hline \text { Less variable expenses } & 27,000 \\\hline \text { Contribution margin } & 18,000 \\\hline \text { Less fixed expenses } & 12,000 \\\hline \text { Net income } & \$ 6,000 \\\hline\end{array}$$ There were no beginning or ending inventories. The company produced and sold 3,000 units during the month.
-If sales decrease by 500 units by next month, by how much would fixed expenses have to be reduced to maintain the current net income?

• A)$2,000.
• B)$7,500.
• C)$3,000.
• D)$6,000.

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Definitions:

Reasonable Ideas

Concepts or thoughts based on logic and sound judgment, typically considered feasible and sensible within a given context.

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Convincing someone to do or believe something through reasoning or argument.

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A persuasion strategy where one starts with a small request to increase the likelihood of gaining compliance with a larger request later.

Billboard

A large outdoor board for displaying advertisements, typically found alongside busy roads and high-traffic areas.