A Company Has Two Different Products That Are Sold in Different

question 142

Multiple Choice

A company has two different products that are sold in different markets.Financial data are as follows: $$\begin{array} { | l | r | r | r | } \hline & \text { Product A } & \text { Product B } & \text { Total } \\\hline \text { Revenue } & \$ 18,000 & \$ 9300 & \$ 27,300 \\\hline \text { Variable cost } & ( 8000 ) & ( 9900 ) & ( 17,900 ) \\\hline \text { Fixed cost (allocated) } & \underline { ( 1000 ) } & \underline { ( 2100 } ) & \underline { ( 3100 ) } \\\hline \text { Operating income (loss) } & \$ 9000 & \$ ( 2700 ) & \$ 6300 \\\hline\end{array}$$ Assume that fixed costs are all unavoidable and that dropping one product would not impact sales of the other.If Product B is dropped,what would be the impact on total operating income of the company?

• A) increases by $2100
• B) increases by $600
• C) decreases by $2100
• D) decreases by $600

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Definitions:

Title VII

A segment from the 1964 Civil Rights Act banning job discrimination on the grounds of race, complexion, faith, gender, or nationality.

Sexual Harassment

Unwelcome sexual advances, requests for sexual favors, and other verbal or physical conduct of a sexual nature that makes submission a condition of employment or a factor in employment decisions or that creates an intimidating, hostile, or offensive work environment. The two types are hostile environment and quid pro quo.

Nonemployee

A nonemployee is an individual who performs work for a company or organization but is not classified as an employee, often without the same rights, benefits, or obligations.

Title VII

Title VII is a section of the Civil Rights Act of 1964 in the United States that prohibits employment discrimination based on race, color, religion, sex, or national origin.