Log Homes on Spec (LHOS) in New Brunswick Makes Log

question 130

Multiple Choice

Log Homes on Spec (LHOS) in New Brunswick makes log home kits. Currently, the company does not advertise and has a low selling price for its kits compared to competitors. Next year, the company plans to increase the selling price and begin a wide advertising campaign. Which of the following statements is true?

• A) LHOS's breakeven point will be lower next year.
• B) LHOS's operating leverage will be higher next year if the same number of units is sold.
• C) LHOS's profits will be higher next year.
• D) LHOS's margin of safety will be lower next year.

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Definitions:

Organizational Policies

The formal guidelines and rules established by an organization to govern operations and decision-making processes, aiming to ensure consistency and compliance.

Structural Variables

Elements within an organization that can be adjusted or managed, such as hierarchy levels, departmentalization, and span of control, influencing its operations and effectiveness.

High-Involvement

A management approach where employees are deeply engaged and have a significant role in decision-making processes.

Professional Growth

The process of improving one’s skills, knowledge, and abilities in a professional career through training, education, and experiences.