Duo,IncCarries Two Products and Has the Following Year-End Income Statement

question 90

Multiple Choice

Duo,Inc.carries two products and has the following year-end income statement (000s omitted) :
If products AR-10 and ZR-7 are substitutes for each other,a sales mix and sales volume variation for the combined products can be calculated.If this combination is calculated,the net effect on profit of the change in the unit sales mix is (round intermediate calculation to five significant digits and final answer to whole dollar) :

• A)$480 favorable.
• B)$700 favorable.
• C)$560 favorable.
• D)$940 favorable.
• E)$1,960 favorable.

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Definitions:

Production Possibilities Frontier

A graph that shows the highest possible production levels for two or more products based on certain input resources.

Infeasible Levels

Conditions or scenarios that cannot be achieved or realized due to practical or theoretical constraints.

Efficient

Achieving maximum productivity with minimum wasted effort or expense, often in the context of economic resource allocation.

Economy

The system by which goods and services are produced, distributed, and consumed within a society or geographic area.