Figure: ABC Company Reference: Ref 10-6 (Figure: ABC Company)

question 13

Multiple Choice

Figure: ABC Company Reference: Ref 10-6 (Figure: ABC Company) The figure depicts the market for a water cleaner for home aquariums. After use it gets washed down drains and enters into streams where it improves the mineral content of the water and thus leads to better water quality and better fish growth. What is the dollar amount of the external benefit created per can of the cleaner?

• A) $12
• B) $6
• C) $3
• D) $15

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Definitions:

Blue Division

A hypothetical division or business unit within a company, perhaps denoted for identification or strategic purposes.

Net Operating Income

The profit generated from a company's everyday operations, excluding income and expenses not related to its core activities.

Contribution Format

A statement or report format, primarily used in managerial accounting, that separates fixed and variable costs to evaluate the performance of a profit center.

Variable Expenses

Costs that change in proportion to the level of activity or production volume.