Percy Productions Has Three Models: D, E, and F

question 126

Multiple Choice

Percy Productions has three models: D, E, and F. The following information is available: Percy Productions is thinking of discontinuing model F because it is reporting an operating loss. All fixed costs are unavoidable. Percy Productions discontinues model F and rents the space formerly used to produce product F for $18,000 per year, what effect will this have on operating income?

• A)Increase $19,000
• B)Increase $8000
• C)Decrease $19,000
• D)Decrease $8000

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Definitions:

Six-Figure Accuracy

Precision to the level of one part in a hundred thousand, often used in the context of scientific measurements or financial calculations.

Calculate

Determine mathematically.

Percent Change

The extent to which a quantity has increased or decreased, expressed as a percentage.

Initial Value

The starting monetary or numerical value of an investment, account, or another financial instrument before any earnings or losses.