Citizen Sells a Watch for $35 at a Variable Cost

Multiple Choice

Citizen sells a watch for $35 at a variable cost of $15 per unit and fixed cost of $1 million per annum. Recent recession has seen jump in material cost by $7. What is the change in profit due to recession if Citizen produces and sells 100 000 watches in a year?

A) $1 000 000 decrease
B) $700 000 decrease
C) $300 000 decrease
D) $800 000 increase
E) $1 800 000 increase