Diamond Company Has Three Product Lines, A, B, and C

question 24

Multiple Choice

Diamond Company has three product lines, A, B, and C. The following financial information is available:If Product Line C is discontinued and the manufacturing space formerly devoted to this line is rented for $6,000 per year, pre-tax operating income for the company will likely:

• A) Be unchanged—the two effects cancel each other out.
• B) Increase by $3,300.
• C) Increase by $4,500.
• D) Increase by $7,200.
• E) Increase by some other amount.

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Definitions:

Health Care Reform

A process of changing policies, regulations, and practices to improve the quality, accessibility, and cost-effectiveness of health care systems.

Taxes Rise

An increase in the amount of money that taxpayers must pay to the government, typically resulting from legislative changes.

Health Care Reform

A broad term for policies and measures aimed at improving healthcare system performance, increasing access to healthcare, and ensuring better health outcomes.

Initial Endowment

The initial allocation of income, wealth, or resources that an individual or firm possesses before entering into any economic transactions.