The following information was extracted from the accounting records of MVA Corporation. MVA sold 20,000 items during the accounting period.
|Total Sales revenue||$1,200,000|
|Total variable costs||$400,000|
|Total fixed costs||$480,000|
If MVA pays $100,000 for advertising, and sales volume increases by 10%, by how much will net income change?
a. decrease of $68,000
b. decrease by $20,000
c. increase by $120,000
d. increase by $20,000
e. no change to net income
- Answer: b.