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Salter Inc.'s unit selling price is $50, the unit variable costs are $35, fixed costs are $125,000, and current sales are 10,000 units. How much will operating income change if sales increase by 5,000 units?
a. $150,000 decrease
b. $175,000 increase
c. $75,000 increase
d. $150,000 increase
Management uses the allowance method to account for bad debts and believe that ultimately that 5% of the year-end balance in Accounts Receivable will not be collected.
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