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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,
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: a. No, because the company will be worse off by $22,000. O b. It is impossible to judge because additional information is needed. O c. No, because sales will drop by 3,000 units. O d. No, because the company will be worse off by $4,000. O e. Yes, the company will be better off by $4,000. XYZ Company uses the high low method to analyze the mixed cost. According to the cost formula derived, the total fixed cost is $10,000. Total cost at the high level of activity was $70,000 and at the low level of activity was $25,000. If the low level of activity was 2,500 units, what was the high level of activity in units? Select one: O a. 7,000 O b. 10,000 O c. 10,500 O d. 11,000 O e. None of the answers given
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