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

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

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Risk Management Techniques

Risk management is the procedure of recognizing, analyzing, monitoring, and preventing the risks and threatening factors of investments and business. Risks can arise from various factors including internal controls, market changes, natural disasters, and failure in productions. Risk management techniques enable entities to control and minimize the risks as well as the threatening factors of the business and it also helps to improve the business.

Question

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

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