Castillo Corporation Has Provided You with the Following Budgeted Income

question 192

Multiple Choice

Castillo Corporation has provided you with the following budgeted income statement for one of its products: $\begin{array}{|l|r|}\hline\text { Sales revenue } & \$ 700,000 \\\hline \text { Variable costs } & (430,000) \\\hline \text { Contribution margin } & \$ 270,000 \\\hline \text { Fixed costs } & \underline{(320,000} \\\hline \text { Operating loss } & \$(50,000 \\\hline\end{array}$ Castillo has just encountered environmental problems with the product and will be forced to drop the product line altogether.Castillo will be able to eliminate 60% of the fixed costs.What will be the impact on operating income of the company?

• A) Operating income will decrease by $192,000.
• B) Operating income will decrease by $78,000.
• C) Operating income will increase by $192,000.
• D) Operating income will increase by $78,000.

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Definitions:

HR Planning

The ongoing process of systematic forecasting both the future demand for and supply of employees to ensure the organization has the right number of workers with the necessary skills.

Independent Variables

Variables that are manipulated or changed in an experiment to test their effect on the dependent variables.

Operational Time Periods

The specific intervals or durations during which business operations are executed, ranging from short-term daily operations to long-term strategic planning periods.

HR Demand Requirement

The estimation of the quantity and quality of human resources that an organization will need to meet its objectives.