$$\begin{array} { ll }
\text { Selling price per unit } & \$ 100 \
\text { Variable expenses per unit } & \$ 40 \
\text { Fixed expenses per month } & \$ 60,000
\end{array}$$ If sales volume were to decrease 15%, from 4,000 units per month to 3,400 units per month, operating income would:

Question

$$\begin{array} { ll } 
\text { Selling price per unit } & \$  100 \
\text { Variable expenses per unit } & \$  40 \
\text { Fixed expenses per month } & \$ 60,000
\end{array}$$ If sales volume were to decrease 15%, from 4,000 units per month to 3,400 units per month, operating income would:

Quizplus · Accepted Answer

Operating income decreases by $36,000 because the contribution margin per unit is $60 ($100 - $40), and a decrease of 600 units (15% of 4,000) results in a $36,000 decrease in contribution margin (600 units x $60).

If Sales Volume Were to Decrease 15%, from 4,000 Units