A Study Has Been Conducted to Determine If One of the Departments

question 214

Multiple Choice

A study has been conducted to determine if one of the departments in Carry Corporation should be discontinued. The contribution margin in the department is $80,000 per year. Fixed expenses charged to the department are $95,000 per year. It is estimated that $50,000 of these fixed expenses could be eliminated if the department is discontinued. These data indicate that if the department is discontinued, the yearly financial advantage (disadvantage) for the company would be:

• A) ($15,000)
• B) $15,000
• C) ($30,000)
• D) $30,000

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Definitions:

Excluded

To be deliberately left out of a group or an activity, often resulting in a lack of access to information or opportunities.

Variable Ratio Schedule

A reinforcement strategy in which a response is rewarded after an unpredictable number of responses, leading to high and steady response rates.

Reinforcement Schedule

A plan or timetable in behavioral psychology that determines how and when the occurrence of a desired behavior will be rewarded.

Performance Level

The degree to which an individual or organization meets specified goals or standards.