Variable Costs as a Percentage of Sales for Lemon Inc

question 125

Multiple Choice

Variable costs as a percentage of sales for Lemon Inc. are 80%, current sales are $600,000, and fixed costs are $130,000. How much will operating income change if sales increase by $40,000?

• A) $8,000 increase
• B) $8,000 decrease
• C) $30,000 decrease
• D) $30,000 increase

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Definitions:

Endometriosis

A condition in which tissue spreads outside the womb and attaches itself to other pelvic organs.

Pelvic Organs

The organs within the pelvic area of the body, including the bladder, rectum, and for women, the uterus and ovaries.

Uterus

A female reproductive organ where fertilized eggs are implanted and where the fetus develops until birth.

Semi-Closed Adoptions

Adoption processes where some forms of contact or information are shared between birth and adoptive parents, but not to the extent of fully open adoptions.