Ron Jensen, the Controller of Inca Industries, Has Prepared an Analysis

question 100

Multiple Choice

Ron Jensen, the controller of Inca Industries, has prepared an analysis to help management determine whether one of Inca's departments should be eliminated.The department's contribution margin is $44,000.The fixed expenses charged to the department total $75,000.Of the fixed expenses, Jensen estimates that $36,000 of those expenses would be eliminated if the department were discontinued.Based on Jensen's analysis, if the department is eliminated, Inca's overall operating income would

• A)increase by $8,000 per year.
• B)decrease by $8,000 per year.
• C)decrease by $31,000 per year.
• D)decrease by $5,000 per year.

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Definitions:

Cannabis

A genus of flowering plants in the family Cannabaceae, commonly referred to as marijuana, used both recreationally and medicinally.

Physical Dependence

A physiological state of adaptation to a specific substance, resulting in withdrawal symptoms when the substance is reduced or discontinued.

Amphetamines

A class of stimulant drugs that speed up the messaging between the brain and body, often used to treat ADHD and narcolepsy but can be abused as performance enhancers or recreational drugs.

Habituated

The process by which an individual becomes accustomed to a stimulus after repeated exposure, leading to a decrease in response.