A company has provided the following data: $$\begin{array} { | l | l | }
\hline \text { Sales } & 3,000 \text { units } \
\hline \text { Sales price } & \$ 70 \text { per unit } \
\hline \text { Variable cost } & \$ 50 \text { per unit } \
\hline \text { Fixed cost } & \$ 25,000 \
\hline
\end{array}$$ If the sales volume decreases by 25%, the variable cost per unit increases by 15%, and all other factors remain the same, net income will:
A)decrease by $15,000.
B)decrease by $3,125.
C)decrease by $31,875.
D)increase by $20,625.

Question

A company has provided the following data: $$\begin{array} { | l | l | } 
\hline \text { Sales } & 3,000 \text { units } \
\hline \text { Sales price } & \$ 70 \text { per unit } \
\hline \text { Variable cost } & \$ 50 \text { per unit } \
\hline \text { Fixed cost } & \$ 25,000 \
\hline
\end{array}$$ If the sales volume decreases by 25%, the variable cost per unit increases by 15%, and all other factors remain the same, net income will:
A)decrease by $15,000.
B)decrease by $3,125.
C)decrease by $31,875.
D)increase by $20,625.

Quizplus · Accepted Answer

The Answer of A company has provided the following data: $$\begin{array} { | l | l | } 
\hline \text { Sales } & 3,000 \text { units } \
\hline \text { Sales price } & \$ 70 \text { per unit } \
\hline \text { Variable cost } & \$ 50 \text { per unit } \
\hline \text { Fixed cost } & \$ 25,000 \
\hline
\end{array}$$ If the sales volume decreases by 25%, the variable cost per unit increases by 15%, and all other factors remain the same, net income will:
A)decrease by $15,000.
B)decrease by $3,125.
C)decrease by $31,875.
D)increase by $20,625.

A Company Has Provided the Following Data If the Sales Volume Decreases by 25%, the Variable Cost