Parker Industries Is a Small Company with a Big Name!

question 65

Multiple Choice

Parker Industries is a small company with a big name! Parker Industries is actually a one-person company that imports strands of LED lights from China and sells them through its website. Parker's only overhead is a storage unit for inventory that costs $125 a month and a $25 monthly fee for website hosting. Currently, Parker imports the lights for $.99 each (including inbound shipping) and sells them for $4.49. Parker also pays shipping expenses of $.50 per light strand. If Parker found a vendor that would provide the same product for $.89 each including shipping, what would happen?

• A) Variable cost would decrease
• B) Fixed cost would decrease
• C) Contribution margin would decrease
• D) Breakeven volume would increase

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Definitions:

Tangentiality

Tangentiality is a communication disorder frequently observed in psychiatric interviews where the individual's responses to questions may be unrelated or indirectly related, veering off the topic.

Neologisms

Newly coined words, expressions, or usages that may be in the process of entering common usage, especially in specific fields or societies.

Derailment

A thought disorder characterized by a person's speech and thinking patterns being disorganized or unrelated, making it difficult to follow the individual's train of thought.

Lack of Abstractness

Pertains to the inability or difficulty in understanding and applying abstract concepts and ideas.