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Liliac Company sells a single product. The selling price of the product is $300 per unit. Variable cost is $180 per unit. Fixed cost is
Liliac Company sells a single product. The selling price of the product is $300 per unit. Variable cost is $180 per unit. Fixed cost is $360,000 per period. Currently, the company is selling 5,000 units of the product. Liliac's current operating leverage is 2.5.
Suppose the company's sales units are expected to increase by 20% (or by $300,000), next period. By how much will the profit increase?
| A. | $120,000 | |
| B. | $300,000 | |
| C. | 10% | |
| D. | 20% |
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