Quintanilla Corporation's controller is preparing a business plan for 20X7. The anticipated level of business activity consists of the following key cost factors:

Total fixed costs $3,500,000

Total variable costs 2,100,000

Total revenues 6,300,000

Quintanilla's Bank has issued an economic advisory report suggesting that companies should anticipate a severe economic downturn during 20X7.

(a) Determine the level of volume reduction that Quintanilla can absorb before becoming unprofitable.

A.

5(a) Contribution margin ratio	0.887
5(a) Breakeven Point in Revenues	$5,252,000
5(a) Volume reduction	17.6%

B.

5(a) Contribution margin ratio	0.666667
5(a) Breakeven Point in Revenues	$5,250,000
5(a) Volume reduction	17.0%

C.

5(a) Contribution margin ratio	0.5
5(a) Breakeven Point in Revenues	$5,130,000
5(a) Volume reduction	16.4%

D.

5(a) Contribution margin ratio	0.45
5(a) Breakeven Point in Revenues	$5,140,000
5(a) Volume reduction	15.2%

E.

5(a) Contribution margin ratio	0.5555
5(a) Breakeven Point in Revenues	$25,370,000
5(a) Volume reduction	8.2%