Assume That Discontinuing the Tam Product Would Result in a $120,000

question 35

Multiple Choice

Assume that discontinuing the Tam product would result in a $120,000 increase in the contribution margin of other product lines.How many Tams would have to be sold next year for the company to be as well off as if it just dropped the line and enjoyed the increase in contribution margin from other products?

• A) 5,000 units.
• B) 6,000 units.
• C) 6,500 units.
• D) 7,000 units.Units required = (275,000 + 25,000 + 120,000)/60 = 7,000 units.

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Definitions:

Waived Status

Refers to certain tests or procedures that are exempt from certain regulatory requirements, often in a healthcare context due to their simplicity and low risk of error.

Diagnostic Testing

Medical tests performed to assist in the diagnosis or detection of diseases, conditions, or the existence of viruses in the body.

Health Care Field

The sector focused on the maintenance or improvement of health via the prevention, diagnosis, treatment, and recovery of medical conditions.

Evaluative Services

Services designed to assess, appraise, or judge the quality, importance, or value of something, often within a healthcare or educational setting.