Given the following data Per units total Sales $15 $45,000 Less variable expense

Question

Given the following data Per units total Sales $15 $45,000 Less variable expense 9. $27,000 Contribution margin 6 $18,000 Less fixed expenses $12,000 Net income. $6,000 If dales decrease by 500 units by what % would fixed expenses have to be reduced by to maintain current net income? A. Some percentage _____ B. 16.7% C. 25.0% D. 33.3% E. 50.0% Given the following data Per units total Sales $15 $45,000 Less variable expense 9. $27,000 Contribution margin 6 $18,000 Less fixed expenses $12,000 Net income. $6,000 If dales decrease by 500 units by what % would fixed expenses have to be reduced by to maintain current net income? A. Some percentage _____ B. 16.7% C. 25.0% D. 33.3% E. 50.0% Per units total Sales $15 $45,000 Less variable expense 9. $27,000 Contribution margin 6 $18,000 Less fixed expenses $12,000 Net income. $6,000 If dales decrease by 500 units by what % would fixed expenses have to be reduced by to maintain current net income? A. Some percentage _____ B. 16.7% C. 25.0% D. 33.3% E. 50.0%

Explanation / Answer

Calculate following :

Fixed expense decrease = (12000-9000)*100/12000 = 25%

so answer is c) 25%

Present Proposed Sales 45000 37500 Variable expense -27000 -22500 Contribution margin 18000 15000 Fixed expense -12000 -9000 Net income 6000 6000

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