A Company Has Provided the Following Data

question 274

Multiple Choice

A company has provided the following data:
If the sales volume decreases by 25%,the variable cost per unit increases by 15%,and all other factors remain the same,what will the outcome be for operating income?

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

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Definitions:

Dividend Payout Ratio

The proportion of net income a firm pays out to its shareholders in the form of dividends.

ROA

Return on Assets, a financial ratio indicating the profitability of a company relative to its total assets.

ROE

Return on Equity, a financial ratio that measures the profitability of a business in relation to shareholder's equity.