Southwest Log Kits Makes Kits for Pool Cabanas

question 53

Multiple Choice

Southwest Log Kits makes kits for pool cabanas. 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) Southwest's breakeven point will be lower next year
• B) Southwest's operating leverage will be higher next year if the same number of units is sold
• C) Southwest's profits will be higher next year
• D) Southwest's margin of safety will be lower next year

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Definitions:

Narcissism

A personality trait characterized by a long-term pattern of exaggerated self-importance, need for admiration, and a lack of empathy for others.

Machiavellianism

A personality trait characterized by manipulativeness, callousness, cynicism, and a focus on self-interest and deception.

Complex

Consisting of many different and connected parts, noting a system or problem that is intricate and complicated.

Crisis

A situation of danger or instability that requires an urgent response.