DM Corporation Has Provided You with the Following Budgeted Income

question 121

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 the impact on operating income be?

• A)Down $45,000
• B)Down $15,000
• C)Up $8,500
• D)Up $7,500

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Definitions:

Retailer

A business entity that sells goods or services directly to consumers, usually in small quantities.

Wholesaler

An entity in the distribution channel that buys goods in large quantities from manufacturers or importers and sells them to retailers or other businesses.

Material Terms

Essential conditions and stipulations within a contract that are significant to the agreement and affect its execution or enforcement.

Subject Matter

The specific object or topic under consideration, discussion, or legal examination.