Given the Following Information: What Would Expected Net Income

question 11

Multiple Choice

Given the following information: What would expected net income be if the company experienced a 10 percent increase in fixed costs and a 10 percent increase in sales volume?

• A)$1,750.
• B)$1,550.
• C)$1,250.
• D)$1,375.

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Definitions:

Operating Cost

Expenses associated directly with the day-to-day running of a business, including costs for materials, labor, and utilities.

Value-Based Pricing

A pricing strategy where the price of a product or service is determined by the perceived value it brings to the customer rather than its cost of production or market competition.

Absorption Costing

An accounting formula that rolls in every cost incurred in manufacturing—direct materials, direct labor, and both variable and fixed manufacturing overhead—into the product’s final cost.

Markup

The amount added to the cost price of goods to cover overhead and profit, expressed as a percentage of the cost.