The Draper Corporation Is Considering Dropping Its Doombug Toy Due

question 162

Multiple Choice

The Draper Corporation is considering dropping its Doombug toy due to continuing losses. Data on the toy for the past year follow:
If the toy were discontinued, Draper could avoid $8,000 per year in fixed costs. The remainder of the fixed costs are not avoidable.
-Assuming all other conditions stay the same,at what level of annual sales of Doombugs (in units) should Draper be indifferent between discontinuing Doombugs or continuing the production and sale of Doombugs?

• A) 20,000 units
• B) 18,000 units
• C) 6,000 units
• D) 4,000 units

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Definitions:

Mania

A mental health condition characterized by excessively elevated mood, energy levels, and, in some cases, delusions or hallucinations, often associated with bipolar disorder.

Antisocial Personality

A personality disorder characterized by a long-term pattern of disregard for, or violation of, the rights of others, often manifesting in criminal behavior.

Major Depression

A common and serious medical illness that negatively affects how you feel, the way you think, and how you act, characterized by persistent feelings of sadness and/or a lack of interest in activities once enjoyed.

Bipolar Disorder

A mental health condition marked by extreme mood swings, including emotional highs (mania or hypomania) and lows (depression).