Black Productions Has Three Models: D, E, and F

question 109

Multiple Choice

Black Productions has three models: D, E, and F. The following information is available: Black Productions is thinking of discontinuing model F because it is reporting an operating loss. All fixed expenses are unavoidable. Assuming Black Productions discontinues model F and does not replace it, what effect will this have on operating income?

• A)Decrease $10,000
• B)Increase $10,000
• C)Increase $6,000
• D)Decrease $6,000

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Definitions:

Capitalism

An economic system characterized by private or corporate ownership of capital goods, by investments that are determined by private decision, and by prices, production, and the distribution of goods that are determined mainly by competition in a free market.

Branch Plants

Factories, offices, or other operations set up in a country by a company that is based in another country, often to take advantage of lower production costs.

Low-Wage

Employment that remunerates workers with pay significantly below the average for the labor market.

Deskilling Thesis

The deskilling thesis is a concept in sociology and economics that suggests technology and organizational changes can lead to the devaluation of workers' skills and their displacement by machines or less skilled labor.