Variable Costs as a Percentage of Sales for Lemon Inc

question 125

Multiple Choice

Variable costs as a percentage of sales for Lemon Inc. are 80%, current sales are $600,000, and fixed costs are $130,000. How much will operating income change if sales increase by $40,000?

• A) $8,000 increase
• B) $8,000 decrease
• C) $30,000 decrease
• D) $30,000 increase

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