Abel Company Produces Three Versions of Baseball Bats: Wood, Aluminum

question 100

Multiple Choice

Abel Company produces three versions of baseball bats: wood, aluminum, and hard rubber. A condensed segmented income statement for a recent period follows: $\begin{array}{lrrrr}&\text { Wood } &\text {Aluminum } &\text {Hard Rubber } &\text { Total }\\\text { Sales }&\$500,000&\$200,000&\$65,000&\$765,000\\\text { Variable expenses }&325,000&140,000&58,000&523,000\\\text { Contribution margin } & 175,000 & 60,000 & 7,000 & 242,000 \\\text { Fixed expenses } & 75,000 &35,000 & 22,000 & 132,000\\\text { Net income (loss) } & \$ 100,000 & \$ 25,000 & \$(15,000) & \$ 110,000\end{array}$ Assume all of the fixed expenses for the hard rubber line are avoidable. What will be total net income if the line is dropped?

• A) $125,000
• B) $103,000
• C) $105,000
• D) $140,000

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Definitions:

Homeostasis

The self-regulating process by which biological systems maintain stability while adjusting to conditions that are optimal for survival.

Thermometer

An instrument for measuring and indicating temperature.

Thermostat

a device used to regulate the temperature of a system so that the system's temperature is maintained near a desired set-point.

Drive-Reduction Theory

Approach to motivation that assumes behavior arises from physiological needs that cause internal drives to push the organism to satisfy the need and reduce tension and arousal.