Arlo Company Makes Bulk Quantities of Cleaning Fluids

question 21

Multiple Choice

Arlo Company makes bulk quantities of cleaning fluids. They currently sell 1,000 containers a month at a price of $22 per unit. If they added a newer scent, they could charge $22.75 per unit for the improved product. It would cost them a total of $700 per month to make that alteration. If so, what would be the effect on operational income?

• A) It would decline by $120.
• B) It would increase by $300.
• C) It would increase by $50.
• D) It would decline by $800.

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Definitions:

Hematoma

A tumor or swelling that contains blood.

Plunger

A tool used to clear blockages in pipes and drains, consisting of a rubber suction cup attached to a stick.

Syringe

A medical instrument used to inject or withdraw fluids from the body.

Barrel

A cylindrical container traditionally made of wooden staves bound by iron hoops, used for storing and transporting liquids like wine, oil, and beer.