DM Corporation Has Provided You with the Following Budgeted Income

question 159

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 be the impact on operating income of the company?

• A)Operating income will decrease by $195,000.
• B)Operating income will decrease by $45,000.
• C)Operating income will increase by $240,000.
• D)Operating income will increase by $55,000.

Analyze the capital accounts before and after the liquidation process.

Understand the process of recording the sale of assets during liquidation.

Apply the concept of gain or loss on realization in the context of liquidation.

Identify the accounts affected during the recording of transactions in liquidation.

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Definitions:

Howard Gardner

An American developmental psychologist best known for his theory of multiple intelligences, which suggests that intelligence is not a single ability but a combination of several distinct types.

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