North Division Has the Following Information $$\begin{array} { l r } \text { Sales } & \$ 1,200,000 \\\text { Variable expenses } & 640,000 \\\text { Fixed expenses } & 620,000\end{array}$$

question 59

Multiple Choice

North Division has the following information: $$\begin{array} { l r } \text { Sales } & \$ 1,200,000 \\\text { Variable expenses } & 640,000 \\\text { Fixed expenses } & 620,000\end{array}$$ If this division is eliminated, the fixed expenses will be allocated to the company's other divisions. What is the incremental effect on net income if the division is dropped?

• A) $60,000 increase
• B) $620,000 decrease
• C) $560,000 decrease
• D) $580,000 increase

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Definitions:

Law Of Effect

A principle in psychology stating that behaviors followed by positive outcomes tend to be repeated, while those followed by negative outcomes are less likely to be repeated.

Reward

A benefit or recognition given for performing a particular action or behavior.

Response

A reaction or action taken by an organism or system as a result of a specific stimulus.

Negative Reinforcer

A stimulus whose removal or avoidance following a behavior increases the frequency of that behavior in the future.