A Company Has Provided the Following Data If the Dollar Contribution Margin Per Unit Is Increased by Sales

A company has provided the following data:
$\begin{array}{|l|r|}\hline \text { Sales } & 3,000 \text { units } \\\hline \text { Sales price } & \$ 70 \text { per unit } \\\hline \text { Variable cost } & \$ 50 \text { per unit } \\\hline \text { Fixed cost } & \$ 25,000 \\\hline\end{array}$
If the dollar contribution margin per unit is increased by 10%,total fixed cost is decreased by 20%,and all other factors remain the same,what will the outcome be for operating income?

A) Increase by $61,000.
B) Increase by $20,000.
C) Increase by $3,500.
D) Increase by $11,000.

Correct Answer:

Verified

Unlock this answer now
Get Access to more Verified Answers free of charge

Access For Free