A small company can produce 500 dolls per week. The doll retails for $30. The variable costs are $7.50 per doll and fixed costs are $9,000 per week. If fixed costs are increased by 10% per week, by how much will this lower the net income?

Question

Quizplus · Accepted Answer

The increase in fixed costs by 10% is calculated as $9,000 * 10% = $900. This increase in fixed costs directly reduces the net income by the same amount, as it does not affect the revenue or the variable costs per unit.

A Small Company Can Produce 500 Dolls Per Week