NEKP IncSells Two Versions of Its Product, Standard and Deluxe

question 11

Multiple Choice

NEKP Inc.sells two versions of its product, standard and deluxe.The standard model has a 15 percent profit margin and the deluxe model has a 17 percent profit margin.The standard model has a 30 percent contribution margin and the deluxe has a 23 percent contribution margin.If other factors are equal, which product should NEKP emphasize to its customers?

• A)The standard model
• B)The deluxe model
• C)Selling either results in the same additional income for the company
• D)Not enough information is given

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Definitions:

Annual Interest

The amount of interest due per year as a percentage of the amount loaned, deposited, or borrowed.

Vacation Fund

A savings account or financial allocation specifically set aside for personal vacation and travel expenses.

Quarter

A three-month period in a fiscal year used as a basis for financial reporting, planning, and performance assessment.

Present Value

The current value of a future sum of money or stream of cash flows, given a specified rate of return.