A Company Has Two Different Products That Sell to Separate

question 134

True/False

A company has two different products that sell to separate markets. Financial data are as follows:
$$\begin{array} { | l | r | r | r | } \hline & \text { Product A } & \text { Product B } & { \text { Total } } \\\hline \text { Revenue } & \$ 15,000 & \$ 9,000 & \$ 24,000 \\\hline \text { Variable cost } & ( 8,000 ) & ( 9,200 ) & ( 17,200 ) \\\text { Fixed cost (allocated) } & \underline { ( 4,000 } ) & \underline { ( 1,000 } ) & ( 5,000 ) \\\hline \text { Operating income } & \underline { \$ , 000 } & \underline { \$ ( 1,200 ) } & \$ 1,800 \\\hline\end{array}$$ Assume that fixed costs are all unavoidable and that dropping one product would not impact sales of the other. Because the contribution margin of Product B is negative, it should be dropped.

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Definitions:

Null Hypothesis

A statement that asserts that there is no effect or no difference, and it serves as the starting point for statistical testing.

P-value

It quantifies the likelihood of observing the collected data if the null hypothesis were true, used in hypothesis testing as a critical component.

Null Hypothesis

A hypothesis that assumes no significant difference or effect, serving as the default assumption in statistical hypothesis testing.

Alternative Hypothesis

A hypothesis that contradicts the null hypothesis; it suggests there is an actual effect or difference.