You Have Been Provided with the Following Information If Sales Increase by 10%,what Level of Fixed Costs Will

question 84

Multiple Choice

You have been provided with the following information:
$$\begin{array} { | l | r | } \hline & \text { Total } \\\hline \text { Sales } & \$ 90,000 \\\hline \text { Less Variable expenses } &\underline{ 54,000 }\\\hline \text { Contribution margin } & 36,000 \\\hline \text { Less fixed expenses } & \underline { 24,000 } \\\hline \text { Operating profit } & \$ 12,000 \\\hline\end{array}$$ If sales increase by 10%,what level of fixed costs will yield a 20% increase in profits?

• A) $14,400.
• B) $19,200.
• C) $25,200.
• D) $26,400.

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Definitions:

Simple Linear Regression

A statistical method to model the relationship between two variables by fitting a linear equation to observed data.

Least Squares

A mathematical approach to find the best-fitting curve to a given set of points by minimizing the sum of the squares of the offsets ("the residuals") of the points from the curve.

Statistical Software

Computer programs designed for performing statistical analysis on data, including computations of descriptive statistics, inferential statistics, and graphically representing data.

SST

Total sum of squares in statistical analysis, representing the total variation in a dataset.