Danielle Sells a Single Product at $20 Per Unit

question 52

Multiple Choice

Danielle sells a single product at $20 per unit.The firm's most recent income statement revealed unit sales of 100,000,variable costs of $800,000,and fixed costs of $400,000.If a $4 drop in selling price will boost unit sales volume by 20%,the company will experience:

• A)no change in profit because a 20% drop in sales price is balanced by a 20% increase in volume.
• B)an $80,000 drop in profit.
• C)a $240,000 drop in profit.
• D)a $400,000 drop in profit.
• E)a change in profit other than those abovE.

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