Zandy Beverage Company Plans to Eliminate a Branch That Has

question 17

Multiple Choice

Zandy Beverage Company plans to eliminate a branch that has a contribution margin of £50,000 and fixed costs of £75,000. Of the fixed costs, £55,000 cannot be eliminated. The effect of eliminating this branch on net income would be a(n)

• A)decrease of £25,000.
• B)increase of £25,000.
• C)decrease of £30,000.
• D)increase of £30,000.

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Definitions:

Inventory Cost

The total cost associated with acquiring, holding, and processing inventory, including purchase costs, storage fees, and handling charges.

Estimated Cost

The anticipated cost or price of an item, service, or project based on current information, forecasts, and analyses before actual costs are incurred.

Estimated Method

An approach that involves approximating financial figures or outcomes based on available data and educated assumptions.

Perpetual Inventory

An inventory system that records changes in inventory levels immediately as they occur, facilitating real-time tracking of stock.