The Following Information Is Provided for Two Products: Assume the Products

question 70

Multiple Choice

The following information is provided for two products: Assume the products will be sold in a store where shelf space is a scarce resource and there is sufficient room for only one of the two products. Expected sales for Product X are 6,000 units, and expected sales for Product Y are 8,000 units. Which product should be sold and why?
$\begin{array}{|l|l|l|}\hline&\text { Product } X&\text { Product } Y\\\hline \text { Selling price per unit } & \$ 35 & \$ 25 \\\hline \text { Variable cost per unit } & 20 & 15 \\\hline\end{array}$

• A)Product Y should be sold solely because the expected demand for this product is greater than the expected demand for Product X.
• B)Product Y should be sold because sales of this product will provide a greater profit.
• C)Product X should be sold because it provides a greater contribution margin per unit.
• D)Product X should be sold because sales of this product will provide a greater profit.

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Definitions:

Financial Statements

Official records that detail the financial activities and position of a business, individual, or other entity.

Marketability

The ease with which a product or service can be sold in the market.

Solvency

A company's ability to meet its long-term financial obligations, indicating financial health and stability.

Trading On The Equity

The practice of using borrowed money to increase the potential return of an investment.