The Management of Woznick Corporation Has Been Concerned for Some

question 50

Multiple Choice

The management of Woznick Corporation has been concerned for some time with the financial performance of its product V86O and has considered discontinuing it on several occasions. Data from the company's accounting system for this product for last year appear below: In the company's accounting system all fixed expenses of the company are fully allocated to products. Further investigation has revealed that $30,000 of the fixed manufacturing expenses and $13,000 of the fixed selling and administrative expenses are avoidable if product V86O is discontinued.
According to the company's accounting system, what is the net operating income earned by product V86O? Include all costs in this calculation-whether relevant or not.

• A) $78,000
• B) ($5,000)
• C) ($78,000)
• D) $5,000

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Definitions:

Indifference Map

A collection of indifference curves that represent a consumer’s preferences for various combinations of goods, illustrating how those preferences change with different bundles.

Marginal Rate

The marginal rate typically refers to the amount of change in one variable due to a unit change in another, commonly used in economics to describe rates of substitution or transformation.

Indifference Curve

A graph showing different combinations of two goods that give the consumer equal satisfaction and utility.

Marginal Rate

Marginal rate commonly refers to the change in one variable relative to a unit change in another, such as in taxation or interest.