If Variable Selling and Administrative Expenses Totaled $124,000 for the Year

question 127

Multiple Choice

If variable selling and administrative expenses totaled $124,000 for the year (80,000 units at $1.55 each) and the planned variable selling and administrative expenses totaled $136,500 (78,000 units at $1.75 each) ,the effect of the quantity factor on the change in contribution margin is:

• A) $3,000 increase
• B) $3,500 decrease
• C) $3,000 decrease
• D) $3,500 increase

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Definitions:

Installment Plan

A payment method allowing a purchaser to pay for goods or services over a period of time in regular, fixed amounts.

Finance Company

A company that makes loans to individuals and/or businesses.

Breach of Agreement

The failure to fulfill the terms of a contract by one or more parties involved.

Faulty Goods

Products that are defective, damaged, or not functioning as intended when sold.