Soap Company Manufactures Soap X and Soap Y and Can

question 12

Multiple Choice

Soap Company manufactures Soap X and Soap Y and can sell all it can make of either.Hours available to produce the products is the constrained resources.Based on the following data, which statement is true? $$\begin{array} { l c c } & \mathrm { X } & \mathrm { Y } \\\hline \text { Sales Price } & \$ 20 & \$ 25 \\\text { Variable Cost } & 14 & 15 \\\hline \text { Hours needed to process } & 3 & 5\end{array}$$

• A) X is more profitable than Y.
• B) Y is more profitable than X.
• C) Neither X nor Y have a positive contribution margin.
• D) X and Y are equally profitable.

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Definitions:

Callable Bonds

Bonds that can be redeemed by the issuer before their maturity date at a specified price.

Bond Indenture

A legal contract between the issuer of bonds and the bondholders, detailing the terms of the bond issue, such as interest rates and maturity dates.

Fiscal Year

A 12-month period used by governments and businesses for accounting and financial reporting, which may or may not align with the calendar year.

Present Value

The discounted value of a future cash flow, taking into account a specific rate of interest.