Markham Industries is studying the profitability of a change in operation and has gathered the following information: Current Operation Anticipated OperationFixed costs$38,000 $48,000 Selling price$16 $22 Variable costs$10 $12 Sales (units) 9,000 6,000 Should Markham Industries make the change?
A. No, because the company will be worse off by $22,000.
B. Yes, the company will be better off by $6,000.
C. No, because sales will drop by 3,000 units.
D. No, because the company will be worse off by $4,000.
E. It is impossible to judge because additional information is needed.
Answer: D
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