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:

Interview Order

The sequence in which candidates are interviewed, which can potentially influence the perception and evaluation of each candidate by the interviewer.

Mere Exposure Effect

The mental effect where individuals start favoring items simply because they have become acquainted with them.

Balance Theory

A psychological theory suggesting that individuals strive for consistency and balance in their relationships and beliefs within a triad of entities (P-O-X model).

Attitudes

A learned tendency to evaluate things in a certain way, which can include evaluations of people, issues, objects, or events.