Question

If a company is creating a pro forma income statement for a situation in which it intends to sell 10% more goods (which it is capable of doing with its current production capacity and without adding additional employees), which expenses below are least likely to increase?

A. cost of goods sold

B. rent

C. shipping costs

D. sales commissions

E. All of the above are likely to remain the same as they were before the production increase.

Answer 1

Option B is the answer Rent
Fixed costs remain same even when the output increases. Rent is a fixed cost All other costs are variable costs. They increase when output increases.