Pelican Co

question 68

Multiple Choice

Pelican Co.sells two products, A and Z.Product A's contribution margin per unit is lower than Product Z's contribution margin per unit.However, Product A's contribution margin ratio is higher than Product Z's contribution margin ratio.If Pelican begins to sell more units of Product A and fewer units of Product Z, its

• A)sales mix will remain unchanged.
• B)breakeven point will be higher than it was previously
• C)breakeven point will be lower than it was previously.
• D)the selling price will increase..

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Definitions:

Implicit Rate

The interest rate implied by the cash flows of a lease, not explicitly stated within the lease agreement.

Non-Cancelable Lease

A lease agreement that does not allow the lessee to terminate the lease before the expiration date without incurring penalties.

Economic Life

The expected period during which an asset remains useful to the average owner.

Warranty

A guarantee provided by a manufacturer or seller regarding the condition of a product and a promise for repair or replacement within a certain period if necessary.