A Company Has Two Different Products That Sell to Separate

question 156

Multiple Choice

A company has two different products that sell to separate markets. Financial data are as follows: Assume that fixed costs are all unavoidable and 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 $100
• C)Decrease $1,100
• D)Decrease $100

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Definitions:

Actual Hours (AH)

The real number of hours worked or required to complete a specific task or project, as opposed to estimated or planned hours.

Standard Hours (SH)

Standard Hours (SH) refer to the estimated time considered necessary to perform a task or produce a good under normal conditions, used for planning and efficiency analysis.

Materials Price Variance

The difference between the actual cost of materials used in production and the standard cost of those materials.

Attainable Standard

A performance measure based on achievable levels of efficiency and effectiveness under current conditions.