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The Draper Corporation Is Considering Dropping Its Doombug Toy Due

question 151

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The Draper Corporation is considering dropping its Doombug toy due to continuing losses. Data on the toy for the past year follow: The Draper Corporation is considering dropping its Doombug toy due to continuing losses. Data on the toy for the past year follow:   If the toy were discontinued, Draper could avoid $8,000 per year in fixed costs. The remainder of the fixed costs are not avoidable. Assuming all other conditions stay the same, at what level of annual sales of Doombugs (in units)  should Draper be indifferent between discontinuing Doombugs or continuing the production and sale of Doombugs? A)  20,000 units B)  18,000 units C)  6,000 units D)  4,000 units If the toy were discontinued, Draper could avoid $8,000 per year in fixed costs. The remainder of the fixed costs are not avoidable.
Assuming all other conditions stay the same, at what level of annual sales of Doombugs (in units) should Draper be indifferent between discontinuing Doombugs or continuing the production and sale of Doombugs?


Definitions:

In Vitro

Experiments or procedures performed in a controlled environment outside of a living organism, often in a test tube or petri dish.

Avoidance

A behavioral response aimed at evading certain situations, thoughts, or feelings that are perceived as unpleasant or stressful.

Exposure

A therapeutic technique aimed at reducing fear or anxiety by gradually and systematically exposing the person to the feared object or context.

PTSD

Post-Traumatic Stress Disorder, a mental health condition triggered by experiencing or witnessing a terrifying event, characterized by flashbacks, nightmares, and severe anxiety.

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