At its present level of operations, a small manufacturing firm has total variable costs equal to 75 percent of sales and total fixed costs equal to 15 percent of sales. Based on variable costing, if sales change by $1.00, income will change by
a. $0.25.
b. $0.10.
c. $0.75.
d. can't be determined from the information given.
A
Let S = 1.00
Let VC = .75S
Let CM = .25S
Under variable costing every dollar of sales will increase net income by $0.25.
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