A Study Has Been Conducted to Determine If One of the Departments

question 125

Multiple Choice

A study has been conducted to determine if one of the departments in Parry Company should be discontinued.The contribution margin in the department is $50,000 per year.Fixed expenses charged to the department are $65,000 per year.It is estimated that $40,000 of these fixed expenses could be eliminated if the department is discontinued.These data indicate that if the department is discontinued,the company's overall net operating income would:

• A) decrease by $10,000 per year.
• B) increase by $10,000 per year.
• C) decrease by $25,000 per year.
• D) increase by $25,000 per year.

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Definitions:

Learning

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Marketing

The process of promoting, selling, and distributing a product or service, including market research and advertising to meet consumer needs.

Maslow's Hierarchy

A psychological theory proposed by Abraham Maslow that categorizes human needs into a five-tier model, from basic (physiological) needs to higher-level (self-actualization) needs.

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