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

Costs and cost behaviour — practice question

A company has fixed costs amounting to $8000$, and these will rise only once production goes above $40000$ units. It produces and sells $20000$ units of one product. Each unit sells for $10$ and has a contribution to sales ratio of $40\%$. By what amount does profit rise if it produces and sells $30000$ units?

  • A$32000$
  • B$40000$
  • C$92000$
  • D$120000$

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