Lusk Corporation Produces and Sells 10,000 Units of Product X

question 361

Multiple Choice

Lusk Corporation produces and sells 10,000 units of Product X each month. The selling price of Product X is $40 per unit, and variable expenses are $32 per unit. A study has been made concerning whether Product X should be discontinued. The study shows that $70,000 of the $120,000 in monthly fixed expenses charged to Product X would not be avoidable even if the product was discontinued. If Product X is discontinued, the monthly financial advantage (disadvantage) for the company of eliminating this product should be:

• A) ($30,000)
• B) $30,000
• C) $40,000
• D) ($40,000)

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Definitions:

Nonverbal Cues

Subtle gestures, expressions, and other physical actions that communicate messages without the use of words.

Selective Perception

The tendency to select information that supports our individual viewpoints while discounting information that threatens our viewpoints.

Social Perception

The process by which individuals form impressions of others and interpret information about them.

Pygmalion Effect

A psychological phenomenon where higher expectations lead to an increase in performance; a form of self-fulfilling prophecy within educational and organizational contexts.