Occidental Company Is Studying Whether to Drop a Product Because

question 63

Multiple Choice

Occidental Company is studying whether to drop a product because of ongoing losses. Costs that would be relevant in this situation would include variable manufacturing costs as well as:

• A)factory depreciation.
• B)avoidable fixed costs.
• C)unavoidable fixed costs.
• D)allocated corporate administrative costs.
• E)general corporate advertising.

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Definitions:

Return on Assets

A profitability ratio that measures how efficiently a company is using its assets to generate earnings.

Direct Method

In cash flow reporting, a method that shows the specific sources and uses of cash, categorizing cash flows into operating, investing, and financing activities.

Net Cash Provided

The amount of cash generated by a company’s operations after accounting for all cash inflows and outflows.

Operating Activities

Activities that relate directly to the production, sale, and delivery of a company's products or services, affecting the net income.