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Company sells a single product at $20 per unit. Sales- 100,000, variable costs $800,000, fixed costs $400,000 If a $4 drop in selling price will boost unit sales by 20% the company will experience:

a. no change because a 20% drop in sales is balanced by a 20% increase in volume.

b. an $80,000 drop in profitability

c. a $240,000 drop in profitability

d a $400,000 drop in profitability

e. a change in profitability other than those above

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M9408893

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