Question

11. Garth Corporation sells a single product. If the selling price per unit and the variable expense per unit both increase by 10% and fixed expenses do not change, then: A. profit will go up 10% B. profit will go up more than 10% C. profit will go down by less than 10% D. profit will not change

Answer 1

D

Step-by-step explanation:

Profit = Revenue - cost

Cost = fixed cost + variable cost

if variable cost increases by 10%, cost would increase by 10%.

Revenue also increases by 10%

So, the increase in revenue would be cancelled by the increase in cost and profit would not change