A Study Has Been Conducted to Determine If Product a Should

question 92

Multiple Choice

A study has been conducted to determine if Product A should be dropped.Sales of the product total $200,000 per year;variable expenses total $140,000 per year.Fixed expenses charged to the product total $90,000 per year.The company estimates that $40,000 of these fixed expenses will continue even if the product is dropped.These data indicate that if Product A is dropped,the company's overall net operating income would:

• A) decrease by $10,000 per year.
• B) increase by $20,000 per year.
• C) decrease by $20,000 per year.
• D) increase by $30,000 per year.

---

Definitions:

Null Hypothesis

A hypothesis in statistical testing that there is no effect or no difference, and any observed deviation is due to sampling or experimental error.

Significance Level

A threshold below which a p-value is considered statistically significant, indicating that observed results are unlikely to be due to chance.

Critical Value

The point or points on the scale of a test statistic beyond which we reject the null hypothesis; these values define the threshold of significance.

Test Statistic

A value, derived from sample data, used in a hypothesis test to determine whether to reject the null hypothesis.