Corn Crunchers Has Three Product Lines If This Product Line Is Eliminated, 30% of the Fixed

question 62

Multiple Choice

Corn Crunchers has three product lines.Its only unprofitable line is Corn Nuts, the results of which appear below for 2013: $$\begin{array} { l r } \text { Sales } & \$ 1,400,000 \\\text { Variable expenses } & 920,000 \\\text { Fixed expenses } & 600,000 \\\text { Net loss } & \$ ( 120,000 ) \end{array}$$ If this product line is eliminated, 30% of the fixed expenses can be eliminated.How much are the relevant costs in the decision to eliminate this product line?

• A)$180,000
• B)$1,520,000
• C)$1,340,000
• D)$1,100,000

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Definitions:

Transfer Price

The price at which goods or services are transferred between departments or subsidiaries of the same company.

Pump Division

A specialized unit or segment within a company focused on the production or sales of pump-related products.

Outside Supplier

An external entity that provides goods or services to a company, often used in the context of manufacturing or procurement.

Operating At Capacity

A situation where a business is utilizing all available resources to produce goods or services at maximum output.