XYZ Company is facing changes in its cost structure so that fixed costs will increase from $400,000 to $500,000, but variable costs will decrease from $12 per unit to $10 per unit. If it were to implement these changes at its current production level of 50,000 units (with no change to selling price), profit would not change. What would happen to the company's profit if the changes were implemented, and production decreased to 45,000 units? a. It will stay the same. b. It will increase. С. It will decrease. d. none of the given answers
XYZ Company is facing changes in its cost structure so that fixed costs will increase from $400,000 to $500,000, but variable costs will decrease from $12 per unit to $10 per unit. If it were to implement these changes at its current production level of 50,000 units (with no change to selling price), profit would not change. What would happen to the company's profit if the changes were implemented, and production decreased to 45,000 units? a. It will stay the same. b. It will increase. С. It will decrease. d. none of the given answers
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:XYZ Company is facing changes in its cost structure so that fixed costs will increase from $400,000
to $500,000, but variable costs will decrease from $12 per unit to $10 per unit. If it were to
implement these changes at its current production level of 50,000 units (with no change to selling
price), profit would not change. What would happen to the company's profit if the changes were
implemented, and production decreased to 45,000 units?
O a. It will stay the same.
O b. It will increase.
C. It will decrease.
O d.
none of the given answers
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