Variable Costs as a Percentage of Sales for Leamon Inc

question 1

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 would 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:

Epinephrine

A hormone and neurotransmitter also known as adrenaline, involved in the body's fight-or-flight response.

Vasopressin

A hormone produced by the hypothalamus and stored in the pituitary gland that regulates water balance in the body by reducing urine production; also known as antidiuretic hormone.

Prolactin

A hormone produced by the anterior pituitary gland that stimulates milk production after childbirth.

Positron Emission Tomography

A nuclear medicine functional imaging technique used to observe metabolic processes in the body.