A Firm Is Analyzing a Relaxation of Credit Standards That

question 122

Multiple Choice

A firm is analyzing a relaxation of credit standards that is expected to increase sales 10 percent. The firm is currently selling 400 units at an average sale price per unit of $575, and the variable cost per unit is $400 at the current sales volume. The average cost per unit is $425. What is the additional profit contribution from sales if credit standards are relaxed?

• A) $23,000
• B) $16,000
• C) $6,000
• D) $7,000

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Definitions:

Francisco "Pancho" Villa

A prominent Mexican revolutionary general known for his role in the Mexican Revolution (1910-1920).

Peasant Insurgents

Individuals or groups from a rural or agricultural background who rebel against established authority or government, often due to grievances or oppression.

Latin American

Referring to countries in the Americas where Romance languages (primarily Spanish and Portuguese) are spoken.

Ottoman Empire

A former Turkish empire that was founded about 1300 by Osman and reached its peak during the 16th and 17th centuries.