Bates Company Plans to Add a New Item to Its

question 56

Multiple Choice

Bates Company plans to add a new item to its line of consumer product offerings.Two possible products are under consideration.Each unit of Product A costs $6 to produce and has a contribution margin of $3,while each unit of Product B costs $12 and has a contribution margin of $4.What is the differential revenue for this decision?

• A) $7
• B) $1
• C) $6
• D) $9

---

Definitions:

Net Taxes

The total taxes paid to the government after subtracting transfers and government spending directly beneficial to the taxpayer, such as social security or unemployment benefits.

Disposable Income

The finance households possess for setting aside savings and covering expenses, following income tax deductions.

Consumption

The use of goods and services by households.

Fiscal Policy

Government policies related to taxation and spending to influence the economy.