Buttercrumbs Bakery Expects to Sell 1 Million Scones Next Year

Multiple Choice

Buttercrumbs Bakery expects to sell 1 million scones next year for $1.25 each.The variable cost of a scone is $0.75.Fixed costs are $150,000, depreciation $200,000 and the tax rate is 25%.If the bakery can increase the price of a scone to $1.50 and all other variables remain the same, free cash flow will increase by [blank].

A) $37,500
B) $150,000
C) $187,500
D) $250,000