Brevard Industries Produces Two Products The Company's Fixed Costs Totaled $70,000, of Which $15,000 Can

question 83

Multiple Choice

Brevard Industries produces two products. Information about the products is as follows:
$\begin{array}{lrr}&\text { Product } 1&\text { Product } 2\\ \text { Units produced and sold } &4,000&10,000\\ \text {Selling price per unit } &\$15&\$13\\ \text { Variable costs per unit } &9&8\\\end{array}$

The company's fixed costs totaled $70,000, of which $15,000 can be directly traced to Product 1 and $40,000 can be directly traced to Product 2. The effect on the firm's profits if Product 2 is dropped would be a:

• A) $10,000 increase.
• B) $35,000 increase.
• C) $35,000 decrease.
• D) $10,000 decrease.

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Definitions:

Teotihuacán

An ancient Mesoamerican city located in the Basin of Mexico, known for its pyramids and complex urban layout, significant in pre-Columbian history.

Pilgrimage Site

A location of great spiritual significance to which believers travel in order to perform religious practices or rituals.

Division of Labor

An economic concept where production tasks are divided among different individuals or groups, leading to specialization and increased efficiency.

Mesoamerican Societies

Ancient civilizations that existed in the Mesoamerican region before the Spanish colonization of the Americas, including the Aztec, Maya, and Olmec among others.