Reference: 09-06
Clemson Company Reported the Following Results Last Year

question 70

Multiple Choice

Reference: 09-06
Clemson Company reported the following results last year for the manufacture and sale of one of its products known as a Tam. $$\begin{array} { | l | r | } \hline \text { Sales } ( 6,500 \text { Tams at } \$ 130 \text { each } ) & \$ 845,000 \\\hline \text { Variable cost of sales } & 390,000 \\\hline \text { Variable distribution costs } & 65,000 \\\hline \text { Fixed advertising expense } & 275,000 \\\hline \text { Salary of product line manager } & 25,000 \\\hline \text { Fixed manufacturing overhead } & 145,000 \\\hline \text { Net loss } & \$ \$ 55,000 ) \\\hline\end{array}$$ Clemson Company is trying to determine whether or not to discontinue the manufacture and sale of Tams. The operating results reported above for last year are expected to continue in the foreseeable future if the product is not dropped. The fixed manufacturing overhead represents the costs of production facilities and equipment that the Tam product shares with other products produced by Clemson. If the Tam product were dropped, there would be no change in the fixed manufacturing costs of the company.
-Assume that discontinuing the manufacture and sale of Tams will have no effect on the sale of other product lines. should be:

• A)$70,000 increase.
• B)$65,000 decrease.
• C)$90,000 decrease.
• D)$55,000 decrease.

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Definitions:

Output Device

A device that sends processed data and information out of a computer in the form of text, pictures (graphics), sounds (audio), or video.

Motherboard

The main printed circuit board in a computer that connects and allows communication between various components.

System Unit

The metal or plastic case that holds all the physical parts of the computer together, including the computer’s processor (its brains), its memory, and the many circuit boards that help the computer function.

Pixel

A single point that creates the images on a computer monitor. Pixels are illuminated by an electron beam that passes rapidly back and forth across the back of the screen so that the pixels appear to glow continuously.