A Company Has Provided the Following Data If the Dollar Contribution Margin Per Unit Is Increased by Sales

question 60

Multiple Choice

A company has provided the following data:
$\begin{array}{|l|r|}\hline \text { Sales } & 3,000 \text { units } \\\hline \text { Sales price } & \$ 70 \text { per unit } \\\hline \text { Variable cost } & \$ 50 \text { per unit } \\\hline \text { Fixed cost } & \$ 25,000 \\\hline\end{array}$
If the dollar contribution margin per unit is increased by 10%,total fixed cost is decreased by 20%,and all other factors remain the same,what will the outcome be for operating income?

• A) Increase by $61,000.
• B) Increase by $20,000.
• C) Increase by $3,500.
• D) Increase by $11,000.

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Definitions:

Unionized Firms

Companies where a majority of workers are members of a labor union, which represents them in negotiations with management.

Employment Growth

An increase in the number of jobs available within a certain industry, sector, or economy.

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An economic philosophy advocating for minimal government intervention in the market and the economy, emphasizing free-market competition.

Workplace Rules

Regulations and guidelines established by employers that outline expected behaviors, responsibilities, and procedures for employees.