Question

hompson Company manufactures and sells cookware. Because of current trends, it expects to increase sales by 15% next year. If this expected level of production and sales occurs and plant expansion is not needed, how should this increase affect next year's total amounts for the following costs? Variable Costs Fixed Costs Mixed Costs a. increase no change increase b. decrease increase increase c. increase increase increase d. no change no change increase

Answer 1

The increase will affect next year's total amounts for the following costs as : a. increase no change increase

Step-by-step explanation:

Increase of sales by 15% next year affects the units of production and sales.

This increment will result in incremental costs of revenues and costs that vary with the number of units produced and sold

Thus, Variable Costs = Increase

Fixed Cost = No Change

Mixed Costs = Increase (the Variable Component Only)