A Company Is Debating Whether to Change Its Cost Structure

question 121

Multiple Choice

A company is debating whether to change its cost structure so that fixed costs increase from $300,000 to $400,000,but variable costs decrease from $5 per unit to $4 per unit.If it were to implement the change at its current production level of 100,000 units,profit would not change.What would happen to the company's profit if the change were implemented and production increased to 125,000 units?

• A)It will stay the same.
• B)It will increase.
• C)It will decrease.
• D)It could increase or decrease.

---

Definitions:

Pectoralis Major

A significant muscle located in the upper part of the chest, aiding in arm and shoulder motion.

Upper Chest

Refers to the region of the body encompassing the upper part of the thorax, including the pectoral muscles, clavicles, and upper ribs.

Cramp

A spasmodic, painful contraction of a muscle or muscles.

Contracted

Engaged by agreement or compact; often refers to muscles shortening during contraction or to formal agreements between parties.