If an Operating Division or a Product Line of a Company

question 95

Multiple Choice

If an operating division or a product line of a company was eliminated, which of the following statements would be TRUE?

• A) Traceable fixed costs would be eliminated.
• B) Untraceable fixed costs would be eliminated.
• C) Variable costs of the product would continue, but be reallocated elsewhere.
• D) Traceable fixed costs would continue, but would have to reallocated elsewhere.

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Definitions:

Coupon

A coupon is the interest payment made to bondholders, usually on an annual or semi-annual basis.

Market Rate of Interest

The prevailing rate at which interest is paid by borrowers for accessing funds in the financial market.

Selling For

The process or act of offering goods or assets for sale at a particular price.

Normal Yield Curve

When the yield curve slopes upward, it is said to be “normal,” because it is like this most of the time.