Charging a Higher Price Per Unit Causes an Increase in Profits

question 52

True/False

Charging a higher price per unit causes an increase in profits for the company because the selling price is larger than the variable cost.

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Definitions:

Net Capital Spending

The amount spent by a company for maintaining or increasing the scope of its assets, minus any sales of fixed assets during the same period.

Net Working Capital

An evaluation of an entity's liquidity level, which is obtained by the subtraction of current liabilities from current assets.

Earnings Per Share

A company's profit divided by the outstanding shares of its common stock, indicating the company's profitability.

Depreciation Expense

An accounting method that allocates the cost of a tangible asset over its useful life.