Corn Crunchers Has Three Product Lines

question 28

Multiple Choice

Corn Crunchers has three product lines. Its only unprofitable line is Corn Nuts, the results of which appear below for 2013: 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:

Consumer Protection Legislation

Laws designed to ensure fair trade for consumers and to protect them from harmful practices by businesses.

Sale of Goods Act

A law that regulates the sale of goods, specifying the rights and duties of the buyer and the seller.

Negotiable Instrument

A document in writing that promises to pay a certain sum of money, either upon request or at a predetermined date, with the person responsible for payment identified on the document.

Unconditional Promise

A commitment or guarantee that is not subject to any conditions or stipulations.