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Home Q & A Board Other Fields Homework Help Business Accounting
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7 years ago
A small business produces a single product and reports the following data:

Sales price   $8.50   per unit
Variable cost   $5.25   per unit
Fixed cost   $22,000   per month
Volume   10,000   units per month

The company believes that the volume will go up to 12,000 units if the company reduces its sales price to $7.50.  How would this change affect operating income?
A) It will decrease by $5,500.
B) It will decrease by $10,500.
C) It will increase by $10,500.
D) It will increase by $5,500.
Textbook 
Horngren's Financial & Managerial Accounting, The Financial Chapters

Horngren's Financial & Managerial Accounting, The Financial Chapters


Edition: 5th
Authors:
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Deprecated Author
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#2
7 years ago
This was certainly a tough question, loving the expertise
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#3
7 years ago
I'm liking this Slight Smile
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