The incremental profit earned from the production and sale of a new product will be higher if:

Question

Quizplus · Accepted Answer

If excess capacity can be used to produce the new product, then there will be minimal additional costs incurred, resulting in a higher incremental profit. Option A is incorrect because increasing the material costs will decrease the incremental profit. Option C is incorrect because modifying existing facilities will incur additional costs, decreasing the incremental profit. Option D is incorrect because a decrease in revenue from existing products will decrease the overall profit, including the incremental profit from the new product.

The Incremental Profit Earned from the Production and Sale of a New