Company XYZ produces and sells two types of calculators: Basic and Scientific. The Basic has a lower selling price per unit compared to the Scientific. However, the Basic has a higher contribution margin compared to the Scientific. Due to fixed production capacity, the company has a cap on total production ability. If the company's CEO has decided to shift the sales mix towards producing more Basic calculators. What would be the effect on total profits? O a. Total profits would decrease O b. Total profits would remain the same OC. Cannot be determined using the above information O d. None of the given answers O e. Total profits would increase

FINANCIAL ACCOUNTING
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ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Company XYZ produces and sells two types of calculators: Basic and Scientific. The Basic has a lower selling price per unit compared to the
Scientific. However, the Basic has a higher contribution margin compared to the Scientific. Due to fixed production capacity, the company has a
cap on total production ability. If the company's CEO has decided to shift the sales mix towards producing more Basic calculators. What would
be the effect on total profits?
O a. Total profits would decrease
O b. Total profits would remain the same
Oc.
Cannot be determined using the above information
O d. None of the given answers
O e. Total profits would increase
Transcribed Image Text:Company XYZ produces and sells two types of calculators: Basic and Scientific. The Basic has a lower selling price per unit compared to the Scientific. However, the Basic has a higher contribution margin compared to the Scientific. Due to fixed production capacity, the company has a cap on total production ability. If the company's CEO has decided to shift the sales mix towards producing more Basic calculators. What would be the effect on total profits? O a. Total profits would decrease O b. Total profits would remain the same Oc. Cannot be determined using the above information O d. None of the given answers O e. Total profits would increase
Holding other factors constant, a company's contribution margin per unit will increase with:
O a. any increase in quantity sold.
b. any decrease in the selling price per unit
O C. All answers given are NOT correct.
O d. increase in its total fixed costs
O e. any decrease in variable cost per unit
Transcribed Image Text:Holding other factors constant, a company's contribution margin per unit will increase with: O a. any increase in quantity sold. b. any decrease in the selling price per unit O C. All answers given are NOT correct. O d. increase in its total fixed costs O e. any decrease in variable cost per unit
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