Citrus Industries Has Three Product Lines, A, B, and C

question 185

Multiple Choice

Citrus Industries has three product lines, A, B, and C. The following information is available: $$\begin{array} { l l l l } & \underline { \mathrm { A } } & \underline { \mathrm { B } } & \underline { \mathrm { C } } \\\text { Sales } & \$ 60,000 & \$ 90,000 & \$ 24,000 \\\text { Variable costs } & \underline { 36,000 } & \underline { 48,000 } & \underline { 20,000 } \\\text { Contribution margin } & \$ 24,000 & \$ 42,000 & \$ 4,000 \\\text { Fixed costs: } & & & \\\text { Avoidable } & \mathbf { 9 , 0 0 0 } & 18,000 & 3,000 \\\text { Unavoidable } & \underline { 6,000 } & \underline { 9,000 } & \underline { 2,400 } \\\text { Operating income } & \underline { \$ 9,000 } & \underline { \$ 15,000 } & \underline {( \$ 1,400) }\end{array}$$ Assuming Citrus Industries can increase the selling price of product C to $30,000, all other information remaining constant, operating income will:

• A) increase $6,000
• B) decrease $6,000
• C) decrease $3,600
• D) increase $3,600

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Definitions:

Sales Presentation

A pitch or demonstration given by a salesperson to show the benefits and features of a product to a potential buyer.

Confidence

The belief in one's abilities and qualities, often enhancing one's performance in tasks such as sales, presentations, and negotiations.

Needs

Essential or very important requirements or conditions necessary for well-being or the achievement of a goal.

Sales Call Objective

The primary goal or outcome that a salesperson aims to achieve during a sales call or meeting.