A Company Expects Its Three Departments to Yield the Following

question 33

Multiple Choice

A company expects its three departments to yield the following income for next year: $\begin{array}{lrrr}&\text { Dept. Q }&\text { Dept. R } &\text { Dept. S } \\\text { Sales } &\$ 6,000&\$ 7,000&\$ 8,000\\\text { Expenses }\\\text { Avoidable } & 2,000 & 3,000 & 4,000 \\\text { Unavoidable } & 1,500 & 2,500 & 4,500 \\\hline \text { Total expenses } & 3,500 & 5,500 & 8,500 \\\hline \text { Net income(loss) } & \underline {\$ 2,500} & \underline { \$ 1,500} & \underline {\$(500) }\end{array}$ Compute the change to the company's total net income if Dept.S is eliminated.

• A)$500 increase
• B)$500 decrease
• C)$4,000 increase
• D)$4,000 decrease
• E)$3,500 decrease

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Definitions:

Useful Data

pertains to information that is relevant, reliable, and can be effectively utilized for decision-making processes or problem-solving.

Opportunity Costs

Letting go of possible advantages in other alternatives when favoring one.

Scarce Resources

Resources that are limited in availability and can be depleted, which necessitates efficient utilization and management.

Economic Thinking

A way of analyzing problems by considering the costs and benefits of different choices and actions.