AB Distributors is a company that serves as a shipping intermediary for other companies. Its sales revenue has increased from the previous year. Jonathan a sales manager at AB, says, "Since the company has increased its revenue ,it is now more profitable." Another manager at AB Distributor, Shawna suggests that if the company's revenue had not increased, it would not have been able to increase its profits Which of the following points out a flaw in Shawna's reasoning? Select one: a. Revenue is not always relevant to figuring profitability b. The company'can increase revenue only by cutting costs. c. Other similar companies have increased their profits too. d. Itis possible to increase profits by lowering costs. e. Profitability is not the only objective of the company.

Question

AB Distributors is a company that serves as a shipping intermediary for other companies. Its sales revenue has increased from the previous year. Jonathan a sales manager at AB, says, "Since the company has increased its revenue ,it is now more profitable." Another manager at AB Distributor, Shawna suggests that if the company's revenue had not increased, it would not have been able to increase its profits Which of the following points out a flaw in Shawna's reasoning? Select one: a. Revenue is not always relevant to figuring profitability b. The company'can increase revenue only by cutting costs. c. Other similar companies have increased their profits too. d. Itis possible to increase profits by lowering costs. e. Profitability is not the only objective of the company.

Answer 1

The correct answer is **d. It is possible to increase profits by lowering costs.**Shawna's reasoning assumes that increased revenue is the *only* way the company could have increased profits. This is flawed because a company can also increase profits by *reducing* its costs, even if revenue stays the same or even decreases slightly. Therefore, the fact that profits increased does *not* necessarily mean revenue *had* to increase.

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