Vandelay Industries Manufactures a Range of Latex Products

question 44

Multiple Choice

Vandelay Industries manufactures a range of latex products. Vandelay recently purchased new equipment to manufacture latex gloves for the medical community. The new machinery leases for $70,000 annually and can produce 10,000 pairs of gloves each day. The raw latex material for each pair of gloves costs $.03 and Vandelay sells the gloves at a wholesale price of $.10 a pair. Currently, sales are 2,500,000 annually. What impact would a $.01 reduction in variable cost have on overall profit?

• A) Increase in profit of $25,000
• B) Decrease in profit of $25,000
• C) Increase in profit of $200,000
• D) Increase in profit of $15,000

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Definitions:

Identical

Exactly the same in every detail; not different in any way.

Multicultural Organization

Is a firm that values diversity but systematically works to block the transfer of societally based subcultures into the fabric of the organization.

Pluralism

A condition or system in which multiple distinct groups, cultures, or entities coexist within a society or organization, accepting and respecting diversities.

Observable Culture

Is the way things are done in an organization.