Question
High Technology Co is considering two proposed alternative production methods for its new product, which are Plan A and Plan B. Information about sales and
High Technology Co is considering two proposed alternative production methods for its new product, which are Plan A and Plan B. Information about sales and costs for each plan as shown in the following table:
Plan A | Plan B | |
Price per unit | $4.0 | $4.0 |
Variable cost per unit | $3.0 | $2.0 |
Fixed cost per year | $50,000 | $140,000 |
Expected units sold (units) | 100,000 | 100,000 |
What are the percentage changes in EBIT of Plan A and EBIT of Plan B resulting from one percent change in units sold from 100,000 units?
Select one:
a.4.0% for Plan A and 1.43% for Plan B
b.2.00% for Plan A and 3.33% for Plan B
c.1.43% for Plan A and 2.0% for Plan B
d.3.33% for Plan A and 2.00% for Plan B
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