A Study Has Been Conducted to Determine If One of the Departments

question 59

Multiple Choice

A study has been conducted to determine if one of the departments in Parry Company should be discontinued. The contribution margin in the department is $40,000 per year. Fixed expenses charged to the department are $65,000 per year. It is estimated that $30,000 of these fixed expenses could be eliminated if the department is discontinued. These data indicate that if the department is discontinued, the company's overall net operating income would:

• A)decrease by $25,000 per year.
• B)decrease by $15,000 per year.
• C)increase by $15,000 per year.
• D)increase by $25,000 per year.

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Definitions:

Culture Shock

A feeling of confusion, doubt, or nervousness caused by being in a place that is very different from what one is used to.

Contact Hypothesis

The more contact you have with someone who is different from you, the more positive regard you will have for that person.

Accommodation Theory

A communication theory that explains how individuals adjust their communication styles to bridge differences with others.