You Have Been Provided with the Following Information If Unit Sales Decrease by 10%,how Much Will Fixed Costs

question 37

Multiple Choice

You have been provided with the following information:
$$\begin{array} { | l | r | r | } \hline&\text { Per Unit } & \text { Total }\\\hline \text { Sales } & \$ 15 & \$ 45,000 \\\hline \text { Less variable expenses } & \underline{ 9 }& \underline{27,000} \\\hline \text { Contribution margin } &6 & 18,000\\\hline \text { Less fixed expenses } & & \underline{12,000 } \\\hline \text { Operating profit } & &\$6,000\\\hline\end{array}$$
If unit sales decrease by 10%,how much will fixed costs have to be reduced by to maintain the current operating profit?

• A) $12,000.
• B) $4,500.
• C) $6,000.
• D) $1,800.

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Definitions:

Terrorism

The use of violence and threats to intimidate or coerce, especially for political purposes.

Warrants

Financial securities that grant the holder the right to buy shares of a company at a fixed price until the expiry date.

Exclusionary Rule

A legal principle in the United States that prevents evidence collected or analyzed in violation of the defendant's constitutional rights from being used in a court of law.

Probable Cause

A reasonable basis for believing that a crime may have been committed, which is a standard used in law to justify searches, arrests, and issuing warrants.