Kule,IncProduces Three Different Lines of Car Racks for Transporting Large,bulky

question 42

Multiple Choice

Kule,Inc.produces three different lines of car racks for transporting large,bulky items.
Total company net annual profit = $40,000 Included in the cost of goods sold is $12,000 of annual rent (a fixed cost) that is distributed equally among the three product lines.As a consultant to Kule,will you recommend that it drop the luggage rack line?

• A) No, dropping the line will actually decrease overall net profits.
• B) Yes, dropping the line will increase company net profits.
• C) No, dropping the line will result in increased fixed costs.
• D) Yes, dropping the line will reduce joint costs.
• E) Yes, dropping the line will reduce cost of goods sold and increase revenues.

---

Definitions:

Chunking

A cognitive strategy for organizing information into more manageable units or chunks, enhancing memory and recall.

Meaningful Units

Discrete pieces of information or elements that can be understood and processed as a single unit within a larger context, enhancing comprehension or learning.

Information

Data that is processed, organized, structured or presented in a given context to make it meaningful or useful.

Peg-Word System

A mnemonic technique for memorizing lists by associating items with a pre-memorized list of words or numbers.