A shift from low-margin sales to high-margin sales
A) may increase net income, even though there is a decline in total units sold.
B) will always increase net income.
C) will always decrease net income.
D) will always decrease units sold.

Question

Quizplus · Accepted Answer

While a shift from low-margin sales to high-margin sales may result in a decline in total units sold, it can increase net income because the profit margin on each unit sold is higher. So, the answer is not B because it is not always the case that the shift will increase net income. The answer is also not C because it is not always the case that the shift will decrease net income. Finally, the answer is not D because while there may be a decline in total units sold, it is not always the case that the shift will always decrease units sold.

A Shift from Low-Margin Sales to High-Margin Sales