L&M Manufacturing Produces a Single Product That Sells for $16

question 88

Multiple Choice

L&M Manufacturing produces a single product that sells for $16. Variable (flexible) costs per unit equal $11.20. The company expects the total fixed (capacity-related) costs to be $7,200 for the next month at the projected sales level of 20,000 units. In an attempt to improve performance, management is considering a number of alternative actions. Each situation is to be evaluated separately.
-Suppose that L&M Manufacturing's management believes that a 10% reduction in the selling price will result in a 30% increase in sales.If this proposed reduction in selling price is implemented,then:

• A)profit will decrease by $12,800 in a month.
• B)profit will increase by $12,800 in a month.
• C)profit will decrease by $32,000 in a month.
• D)profit will increase by $32,000 in a month.

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Definitions:

Exception Fallacy

A logical error where a conclusion is drawn about an entire group based on a few atypical examples.

Dominant Culture

The culture that holds the most power and is most widely accepted within a particular society, often shaping mainstream norms and values.

Negative Assessment

A critical or unfavorable evaluation of something.

Ethno-Cultural Group

A community of people who share common cultural and ethnic identity, including language, traditions, customs, and often a shared history.