Assume Mussa Company Has the Following Information Available If Fixed Costs Increase by $200,000,what Is the Expected Operating

question 114

Multiple Choice

Assume Mussa Company has the following information available:
$\begin{array} { l } \text {Selling price per unit }&\$100\\ \text {Variable cost per unit }&\$45\\ \text { Fixed costs per year}&\$420,000\\ \text {Expected sales per year (units) }&20,000\\\end{array}$

If fixed costs increase by $200,000,what is the expected operating income?

• A) $280,000
• B) $480,000
• C) $680,000
• D) $1,380,000

---

Definitions:

Stockholders' Equity

Stockholders' equity represents the ownership interest of shareholders in a corporation, calculated as total assets minus total liabilities.

Shares

Shares represent units of ownership interest in a corporation or financial asset, providing an entitlement to a portion of the company's profits and assets.

Book Value

The net value of a company's assets as recorded on the balance sheet, calculated as total assets minus intangible assets and liabilities.