A Study Has Been Conducted to Determine If Product a Should

question 40

Multiple Choice

A study has been conducted to determine if Product A should be dropped. Sales of the product total $200,000 per year; variable expenses total $140,000 per year. Fixed expenses charged to the product total $90,000 per year. The company estimates that $40,000 of these fixed expenses will continue even if the product is dropped. These data indicate that if Product A is dropped, the company's overall net operating income would:

• A)decrease by $20,000 per year.
• B)increase by $30,000 per year.
• C)decrease by $10,000 per year.
• D)increase by $20,000 per year.

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Definitions:

Scalenes

A group of muscles in the neck that assist in the process of respiration by elevating the ribs and flexing the neck.

Diaphragm

A large, dome-shaped muscle located at the base of the lungs that plays a crucial role in breathing by contracting and relaxing to change the volume of the thoracic cavity.

Linea Alba

A fibrous structure that runs down the midline of the abdomen, forming part of the abdominal wall and separating the left and right abdominal muscles.

Symphysis Pubis

A cartilaginous joint located between the left and right pubic bones at the front of the pelvis, providing slight mobility and acting as a shock absorber.