Variable Costs as a Percentage of Sales for Leamon Inc

question 50

Multiple Choice

Variable costs as a percentage of sales for Leamon Inc.are 75%,current sales are $600,000,and fixed costs are $110,000.How much will operating income change if sales increase
By $50,000?

• A)$37,500 increase
• B)$12,500 decrease
• C)$37,500 decrease
• D)$12,500 increase

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Definitions:

Financial Statement

Formal records that outline the financial activities and condition of a business, individual, or other entity.

Normal Balance

The side (debit or credit) of an account that is expected to have a higher balance, indicating its usual increase direction.

Account Nature

Refers to the classification of an account as either an asset, liability, equity, revenue, or expense, which dictates its role and presentation in financial statements.

Normal Balance

The side of an account on which increases are recorded, typically the debit side for assets and expenses, and the credit side for liabilities, equity, and revenue.