Accounting 9706 · AS & A Level · Costs and cost behaviour

Costs and cost behaviour — practice question

The information below relates to one month. Selling price per unit: $100$ Contribution per unit: $30$ Total fixed costs were $100\,000$, and budgeted sales amounted to $5000$ units. The directors believe that if the unit selling price is cut to $95$, monthly sales will rise to $6500$ units. What increase in profit would result from this?

  • A$12\,500
  • B$32\,500
  • C$45\,000
  • D$77\,500

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