A Firm with $50,000 in Fixed Costs, Selling Price of $25

Multiple Choice

A firm with $50,000 in fixed costs, selling price of $25 per unit, and variable costs of $5 a unit is currently operating at breakeven volume. If sales decrease 50 units and costs remain the same, the firm will:

A) have a loss of $1,000.
B) have a profit of $2,000.
C) increase variable costs of $2,500.
D) lower its total fixed costs.