A Company Has Three Product Lines, One of Which Reflects

question 9

Multiple Choice

A company has three product lines, one of which reflects the following results: If this product line is eliminated, 60% of the fixed expenses can be eliminated and the other 40% will be allocated to other product lines. If management decides to eliminate this product line, the company's net income will

• A) increase by $50,000.
• B) decrease by $90,000.
• C) decrease by $6,000.
• D) increase by $6,000.

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Definitions:

Employee

An individual who works part-time or full-time under a contract of employment, contributing labor and expertise to an employer.

Customer

An individual or business that purchases goods or services from another entity, often considered the most significant component in the business world.

Stakeholders

Individuals or groups that have an interest or stake in the outcome of a project, initiative, or company.

Corporate Shareholders

Individuals or entities that own shares in a corporation and have potential financial gains or losses depending on the company's performance.