Answer the Following Questions Using the Information Below

question 29

Multiple Choice

Answer the following questions using the information below:
Bush Manufacturing produces a single product that sells for $100. Variable costs per unit equal $25. The company expects total fixed costs to be $60,000 for the next month at the projected sales level of 1,000 units. In an attempt to improve performance, management is considering a number of alternative actions. Each situation is to be evaluated separately.
-Suppose that management believes that a 20% reduction in the selling price will result in a 20% increase in sales. If this proposed reduction in selling price is implemented:

• A)operating income will decrease by $9,000
• B)operating income will increase by $9,000
• C)operating income will decrease by $20,000
• D)operating income will increase by $15,000

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Definitions:

Exploring

The act of traveling through an unknown area to learn about it or searching for something.

Brainstorming

A group problem-solving technique involving the spontaneous contribution of ideas from all members of the group.

Writing in a Journal

The act of recording personal thoughts, feelings, and experiences in a notebook or digital document, used as a form of self-expression or reflection.

Thoughts

mental processes involving thinking, reasoning, or contemplating, often reflecting personal beliefs, opinions, or plans.