Carlo Company Makes Bulk Quantities of Cleaning Fluids

question 83

Multiple Choice

Carlo Company makes bulk quantities of cleaning fluids. They currently sell 1,000 containers a month at a price of $22 per unit. If they added a newer scent, they could charge $22.75 per unit for the improved product. It would cost them a total of $700 per month to make that alteration. What would be the effect on operating income?

• A)It would decline by $120.
• B)It would increase by $300.
• C)It would increase by $50.
• D)It would decline by $800.

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Definitions:

Joint Ventures

A commercial enterprise undertaken jointly by two or more parties that otherwise retain their distinct identities.

Control Over Venture

The power or ability to govern the financial and operating policies of an entity so as to benefit from its activities.

Equal Resources

The concept that entities or individuals have access to the same amount of resources, enabling equitable opportunities.

Proportionately Adjusted Net Income

Net income adjusted to reflect a company's share in the profits or losses of its associates or joint ventures.