A Segment Has the Following Data $$\begin{array} { l r } \text { Sales } & \$ 700,000 \\\text { Variable expenses } & 300,000 \\\text { Fixed expenses } & 550,000\end{array}$$

question 118

Multiple Choice

A segment has the following data: $$\begin{array} { l r } \text { Sales } & \$ 700,000 \\\text { Variable expenses } & 300,000 \\\text { Fixed expenses } & 550,000\end{array}$$ What will be the incremental effect on net income if this segment is eliminated, assuming the fixed expenses will be allocated to profitable segments?

• A) $400,000 increase
• B) $400,000 decrease
• C) $5,000 decrease
• D) Cannot be determined from the data provided.

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Definitions:

Hypothesis

A preliminary hypothesis presented upon scant evidence, aimed at instigating further exploration.

Null Hypothesis

A statement used in statistical testing which suggests that there is no significant effect or difference.

Directional Research Hypothesis

A hypothesis that predicts not only that a relationship exists between variables but also the direction of that relationship.