The Management of Furrow Corporation Is Considering Dropping Product L07E

question 96

Multiple Choice

The management of Furrow Corporation is considering dropping product L07E.Data from the company's budget for the upcoming year appear below: In the company's accounting system all fixed expenses of the company are fully allocated to products.Further investigation has revealed that $186,000 of the fixed manufacturing expenses and $106,000 of the fixed selling and administrative expenses are avoidable if product L07E is discontinued.The financial advantage (disadvantage) for the company of eliminating this product for the upcoming year would be:

• A)$8,000
• B)($173,000)
• C)($8,000)
• D)$173,000

Understand the concept of intracompany and intercompany comparisons for financial analysis.

Identify and compute various financial ratios to assess a company's financial position and performance.

Understand the concept of financial ratios and their calculation.

Grasp the importance of the current ratio and working capital measurement in assessing a company's liquidity.

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Definitions:

Federal Trade Commission

The Federal Trade Commission is an independent agency of the United States government, established to prevent unfair methods of competition and unfair or deceptive acts or practices in commerce.

Misleading Advertising

Marketing communications that knowingly or unknowingly deceive or mislead the audience, often leading to false impressions about a product or service.

Government Agency

An organization within the government responsible for the administration of specific functions or the enforcement of laws.

Second Amendment

A part of the U.S. Bill of Rights that protects the right of individuals to keep and bear arms.