Use the Following Information for the Next 3 Questions

question 98

Multiple Choice

Use the following information for the next 3 questions.
Ricardo Company has three products, A, B, and C. The following information is available:
-Suppose that eliminating Product C will free up warehouse space for Product A's use, and will reduce the avoidable fixed costs of Product A by $1,500. If Ricardo drops Product C, then operating income will

• A) Increase by $3,700
• B) Decrease by $14,500
• C) Decrease by $8,300
• D) Decrease by $2,500

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Definitions:

Financial Benefits

Compensation and perks, beyond base salary, offered to employees, including bonuses, stock options, and retirement plans, to enhance job satisfaction and loyalty.

Management Needs

The specific requirements or resources that managers need to effectively run an organization or team, including personnel, technology, and information.

Conglomerate

A large corporation composed of a number of different companies or divisions operating in varied industries.

Vertical Merger

The combination of two or more companies that operate at different levels within the same supply chain or industry.