The Most Recent Income Statement for the Parma Branch of the Dinero

question 151

Multiple Choice

The most recent income statement for the Parma Branch of the Dinero Company is presented below. $\begin{array}{ll}\text { Sales } & \$ 57,000 \\\text { Variable costs } & \underline{31,500} \\\text { Contribution margin } & \$ 25,500\\\text { Fixed costs: }\\\text { Avoidable } & 13,500 \\\text { Unavoidable } & 18,000\\\text { Operating income }&\$16,000\end{array}$ If the Parma Branch is eliminated and the space is rented for $24,000, operating income will be:

• A) increased by $24,000
• B) decreased by $30,000
• C) decreased by $12,000
• D) increased by $12,000

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Definitions:

Units of Labor

Quantitative measures representing the workforce or the effort exerted by workers in the production of goods and services.

Dress Factory

A manufacturing facility where dresses are produced in large quantities.

Production Isoquants

Curves that represent combinations of various inputs that result in the same level of output, used in the analysis of production technology.

Marginal Product

The additional output that is produced by employing one more unit of a particular input, keeping all other inputs constant.