The Draper Corporation Is Considering Dropping Its Doombug Toy Due

question 55

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.
-Suppose that if the Doombug toy is dropped,the production and sale of other Draper toys would increase so as to generate a $16,000 increase in the contribution margin received from these other toys.If all other conditions are the same,the financial advantage (disadvantage) from discontinuing the production and sale of Doombugs would be:

• A) ($6,000)
• B) $14,000
• C) ($2,000)
• D) $28,000

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Definitions:

Sensory Memory

The shortest-term element of memory, it is the ability to retain impressions of sensory information after the original stimuli have ended.

Primary Memory

Refers to the part of the memory system that holds information for a short period, typically just a few seconds, for immediate use or processing.

Iconic Memory System

A part of the visual memory system which is a very brief (<1 second), pre-categorical, high capacity memory store.

Visual Sense

The ability to interpret the surrounding environment utilizing light that enters the eyes, creating visual perception.