XYZ company is studying the profitability of a change in operation and has gathered the following information. Anticipated Operation: Fixed Costs: $38.000, Selling Price: $16, Variable Cost $10, and Sales (Units) 9,000. Current Operation: Fixed Costs: $48,000, Selling Price: $22, Variable Cost: $12, and Sales (Units): 6.000. Should XYZ company make the change? Select one: O a. No, because sales will drop by 3.000 units. O b. Yes, the company will be better off by $4.000. O C. No, because the company will be worse off by $22.000. O d. it is impossible to judge because additional information is needed. O e. No, because the company will be worse off by $4,000

XYZ company is studying the profitability of a change in operation and has gathered the following information. Anticipated Operation: Fixed Costs: $38.000, Selling Price: $16, Variable Cost $10, and Sales (Units) 9,000. Current Operation: Fixed Costs: $48,000, Selling Price: $22, Variable Cost: $12, and Sales (Units): 6.000. Should XYZ company make the change? Select one: O a. No, because sales will drop by 3.000 units. O b. Yes, the company will be better off by $4.000. O C. No, because the company will be worse off by $22.000. O d. it is impossible to judge because additional information is needed. O e. No, because the company will be worse off by $4,000

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter3: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 7EA: Flanders Manufacturing is considering purchasing a new machine that will reduce variable costs per...

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e. 5,000 XYZ company is studying the profitability of a change in operation and has gathered the following information. Current Operation: Fixed Costs: $38,000, Selling Price: $16, Variable Cost: $10, and Sales (Units): 9,000. Anticipated Operation: Fixed Costs: $48,000, Selling Price: $22, Variable Cost: $12, and Sales (Units): 6,000. Should XYZ company make the change? Select one: O a. No, because sales will drop by 3,000 units. Ob. It is impossible to judge because additional information is needed. Oc. No, because the company will be worse off by $4,000. O d. Yes, the company will be better off by $6,000. Oe. No, because the company will be worse off by $22000. Next page
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