Jimbob Co Is Considering Offering Each of the Three Products the the Company

question 57

Multiple Choice

Jimbob Co. is considering offering each of the three products the company manufactures at two levels - "Standard" and "Advanced". Currently all products are processed to the "Standard" level and all products manufactured at this level can be sold. Management believes that it will be possible to generate additional sales revenue and profits by further processing some of units of the "Standard" level products to the "Advanced" level. Fixed costs will not change in total. In making the decision whether it should process products further which decision rule should be followed?

• A)If there is a positive contribution margin at the "Advanced" level, then process further.
• B)If the projected selling prices at the "Advanced" level are at least 20% greater than those at the "Standard" level, then process further.
• C)If the difference in the selling price of units at the "Advanced" level over the selling prices of units at the "Standard" level is greater than the additional unit costs of processing from the "Standard" level to the "Advanced" level, then process further.
• D)If the unit costs at the "Advanced" level are greater than the unit costs at the "Standard" level, do not further process.

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Definitions:

Frontal Lobe

The part of the brain located at the front of each cerebral hemisphere, responsible for executive functions and voluntary behavior.

Cerebral Cortex

The outer layer of neural tissue of the cerebrum in the brain, playing key roles in memory, attention, perception, cognition, awareness, thought, language, and consciousness.

Forebrain

The anterior part of the brain, including the cerebrum, thalamus, and hypothalamus, responsible for complex behaviors and cognitive functions.

Spinal Cord

A long, thin, tubular structure made up of nervous tissue, which extends from the brainstem to the lower back, functioning in transmitting neural signals between the brain and the rest of the body.