A Company Has Two Different Products That Sell to Separate

question 31

Multiple Choice

A company has two different products that sell to separate markets. Financial data are as follows: Assume that fixed costs of $500 could be eliminated if product B was dropped; assume furthermore that dropping one product would not impact sales of the other. If Product B is dropped, what would the impact be on total operating income?

• A)Increase $1,100
• B)Increase $600
• C)Increase $500
• D)Increase $100

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Definitions:

Minimum Required Payment

The lowest amount that must be paid on an outstanding debt, such as a credit card bill, to avoid penalties.

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Financial institutions or corporations that issue credit cards to consumers, facilitating electronic payments and extending credit.

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Variations or disparities between countries in aspects such as economy, culture, policies, and demographic characteristics.

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Initiatives designed to encourage the donation of organs for transplant, often managed by government or nonprofit entities.