DM Corporation Has Provided You with the Following Budgeted Income

question 46

Multiple Choice

DM Corporation has provided you with the following budgeted income statement for one of their products: DM has just encountered environmental problems with the product and will be forced to drop the product line altogether. They will be able to eliminate 75% of the fixed expenses. What will be the impact on operating income of the company?

• A)Operating income will decrease by $195,000.
• B)Operating income will decrease by $45,000.
• C)Operating income will increase by $240,000.
• D)Operating income will increase by $55,000.

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Definitions:

Entrepreneurship

The process of initiating a business or businesses, facing financial dangers with the expectation of profit.

Serial Entrepreneur

A person who repeatedly starts new businesses, moving from one venture to another, and often leveraging the experiences and capital from previous successes.

Benefit Corporation (B-Corp)

A type of legal structure for a business that aims to generate profit while also focusing on positive impacts for society, workers, the community, and the environment.

Family Enterprising

The involvement of family members in developing and managing business ventures or entrepreneurial activities.