Company XYZ produces and sells scientific calculators. The company is currently producing and selling 10,000 units. At this level, the fixed expenses were $10,500. In order to expand sales, the company plans to reduce the selling price by $2, which is expected to implove unit sales by 40% and achieve fixed cost savings of $10,000. Given that the company does not pay commissions to its sales people, the variable expenses per unit are expected to remain the same. What would be the impact on profit? O a. Decrease by $5,000 O b. Increase by $1,000 O c. Decrease by $6,000 O d. Increase by $2,000 e. No change

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Company XYZ produces and sells scientific calculators. The company is currently producing and selling 10,000 units.
At this level, the fixed expenses were $10,500. In order to expand sales, the company plans to reduce the selling price
by $2, which is expected to imphove unit sales by 40% and achieve fixed cost savings of $10,0000. Given that the
company does not pay commissions to its sales people, the variable expenses per unit are expected to remain the
same. What would be the impact on profit?
O a.
Decrease by $5,000
O b. Increase by $1,000
O c. Decrease by $6,000
O d. Increase by $2,000
O e.
No change
Transcribed Image Text:Company XYZ produces and sells scientific calculators. The company is currently producing and selling 10,000 units. At this level, the fixed expenses were $10,500. In order to expand sales, the company plans to reduce the selling price by $2, which is expected to imphove unit sales by 40% and achieve fixed cost savings of $10,0000. Given that the company does not pay commissions to its sales people, the variable expenses per unit are expected to remain the same. What would be the impact on profit? O a. Decrease by $5,000 O b. Increase by $1,000 O c. Decrease by $6,000 O d. Increase by $2,000 O e. No change
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