which of the following will result to higher net profit? 5% decrease in unit selling prices accompanied by 5% increase in sales volume 5% increase in unit selling prices 10% increase in unit selling prices and unit variable costs 10% increase in unit selling prices accompanied by 10% decrease in sales volume.
which of the following will result to higher net profit? 5% decrease in unit selling prices accompanied by 5% increase in sales volume 5% increase in unit selling prices 10% increase in unit selling prices and unit variable costs 10% increase in unit selling prices accompanied by 10% decrease in sales volume.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
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Company produces and sells X and Y. In 2020, 10,000 units of X were sold at P10 per unit with contribution margin P4 per unit and 15,000 units of Y were sold at P12 per unit with contribution margin P5 per unit. Total fixed cost is P100,000. In 2021, which of the following will result to higher net profit?
5% decrease in unit selling prices accompanied by 5% increase in sales volume
5% increase in unit selling prices
10% increase in unit selling prices and unit variable costs
10% increase in unit selling prices accompanied by 10% decrease in sales volume.
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