Overland Company Is Planning on Discontinuing One of Its Markets

question 4

Multiple Choice

Overland Company is planning on discontinuing one of its markets in Japan. The Japanese market has a contribution margin of $33,000. Fixed costs for the Japanese market are $55,000, 70% of which are unavoidable. What will be the effect on Overland's net income if the Japanese market is eliminated?

• A) Increase by $33,000
• B) Decrease by $33,000
• C) Increase by $16,500
• D) Decrease by $16,500

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Definitions:

Statistically Significant

A term used to describe a result that is not likely to occur randomly, but rather is likely to be attributable to a specific cause.

Statistically Accurate

Describes data or results that are precise and reliable according to statistical analysis and principles.

Statistically Insignificant

A term used to describe results that lack enough statistical evidence to conclude that a certain effect or difference is present.

Analogue Study

An investigation or experiment that replicates real-world conditions in a controlled setting to understand behaviors or phenomena.