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

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.

Correct Answer:

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