ABC Corporation Makes Mattresses in Three Sizes: Twin, Queen and King.Twin

question 133

Multiple Choice

ABC Corporation makes mattresses in three sizes: twin, queen and king.Twin mattresses have shown a loss for several years, similar to the operating loss shown below: None of the fixed costs are avoidable.What will be the total operating income for the corporation if twin mattresses are discontinued?

• A)$50,000 loss
• B)$15,000 loss
• C)$30,000 profit
• D)$105,000 profit

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Definitions:

Lender of Last Resort

A role usually performed by a central bank, providing funds to financial institutions facing financial difficulty to prevent systemic collapse.

Federal Reserve Board

The governing body of the Federal Reserve System, responsible for overseeing American monetary policy and financial system regulation.

Bank Failures

Occurrences when a bank is unable to meet its obligations to depositors or creditors and ceases operations, often resulting in regulators seizing the institution.

Great Depression

A severe worldwide economic downturn that took place during the 1930s, marked by massive unemployment and widespread poverty.