Company X has two products: Product A and product B. Product A has a higher selling price but a lower contribution margin. Company X has fixed production capacity. If company x decided to change the current product mix by ?producing and selling more units of product A, what would be the effect on Operating Income Cannot be determined a O Operating income would decrease b O Operating Income would increase .c O None of the given answers d O Operating Income would remain the same .e

Company X has two products: Product A and product B. Product A has a higher selling price but a lower contribution margin. Company X has fixed production capacity. If company x decided to change the current product mix by ?producing and selling more units of product A, what would be the effect on Operating Income Cannot be determined a O Operating income would decrease b O Operating Income would increase .c O None of the given answers d O Operating Income would remain the same .e

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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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 Scientific calculators . What would be the effect on total profits? a. None of the given answers b . Cannot be determined using the above information c.Total profits would increase d. Total profits would remain the same e. Total profits would decrease
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A firm can reduce its breakeven volume by: decreasing fixed costs. B) decreasing contribution margin. Jy C increasing variable costs. lowering selling price.
Which one of the following statement is not correct? O Both fixed and variable costs influence short-term decision-making. O Short-term decision-making is all about analysing those costs that will change as a result of taking a particular action. O Opportunity costs are only considered when resources are limited. O Break-even analysis is used to determine how many units of a product or a service a business has to sell to cover all its costs.
Which of the following is true when referring to fixed costs? I. Fixed costs remain constant in total throughout the relevant range. II. The trend in companies today is toward greater fixed costs relative to variable costs. III. As volume increases, unit fixed cost and total fixed cost will change. IV. Fixed costs increase in total throughout the relevant range. a. II only b. All but IV c. I and II d. All but III e. None of these
Which of the following items will not cause the company's ROA to increase? Multiple Choice O O Reducing costs. Reducing company assets without impacting sales. Increasing company assets. Increasing the selling price per unit. $
Each of a company's two product lines has a different contribution margin ratio . If the company's total sales remain the same but the sales mix shifts toward selling more of the product with the higher contribution ratio , which of the following is true ? O a Fixed cost will be constant . . the breakeven point will decrease . Ocall of the answers are true . d the average contribution margin ratio will increase . O e operating income will increase