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

question 92

Multiple Choice

A company has provided the following data: $$\begin{array} { | l | l | } \hline \text { Sales } & 3,000 \text { units } \\\hline \text { Sales price } & \$ 70 \text { per unit } \\\hline \text { Variable cost } & \$ 50 \text { per unit } \\\hline \text { Fixed cost } & \$ 25,000 \\\hline\end{array}$$ If the sales volume decreases by 25%, the variable cost per unit increases by 15%, and all other factors remain the same, net income will:

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

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Definitions:

In Vitro Fertilization

A medical procedure where an egg is fertilized by sperm outside the body, in a laboratory.

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A cell formed by the merging of a male sperm cell and a female egg cell, marking the beginning of human development.

Laboratory

A controlled setting from which many of the complex factors of the “real world” have been removed.

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The combination of characteristics or qualities that form an individual's distinctive character, influencing their behavior and interactions.