Theodora Patel makes stuffed teddy bears. Recent information for her business follows:

Selling price per bear$25.00
Total fixed cost per month1,500.00
Variable cost per bear15.00

She sells 350 bears this month.

Suppose sales increase by 20 percent next month, calculate the effect that increase will have on her profit. (Round your intermediate calculations to 2 decimal places. Omit the "%" sign in your response.)

Effect on profit:%

Increase in income= 70*10= $700

Effect on income= (700/2,000)*100= 35% increase

Explanation:

Giving the following information:

Selling price per bear= $25.00

Total fixed cost per month= $1,500.00

Variable cost per bear= $15.00

She sells 350 bears this month.

First, we need to calculate the actual total income:

Income= total contribution margin - total fixed costs

Income= 350*(25 - 15) - 1,500= $2,000

Now, the number of units increase by 20%.

Because of the fixed costs remain the same, the increase in income is the increase in the contribution margin

Units= 350*0.20= 70 units

Increase in income= 70*10= $700

In % terms:

Effect on income= (700/2,000)*100= 35% increase

the answer is d

explanation: