Given the following data: If sales decrease by 500 units,by what % would fixed expenses have to be reduced by to maintain current net income?
A)50.0%.
B)33.3%.
C)25.0%.
D)16.7%.

Question

Quizplus · Accepted Answer

To maintain the current net income with a decrease in sales, fixed expenses must be reduced proportionally to the lost contribution margin. Assuming the contribution margin per unit is constant, a 25% reduction in fixed expenses would offset the loss from 500 fewer units sold.

Given the Following Data: If Sales Decrease by 500 Units,by