Knoll Manufacturing Has Manufacturing Facilities in Several Locations

question 111

Multiple Choice

Knoll Manufacturing has manufacturing facilities in several locations.One of Knoll's facilities has been showing losses over several quarters,and management is considering closing the facility.If the facility is closed,only two part-time employees will be retained by Knoll.The annual wage of each part-time worker is $14,400.This particular location has been in operation for many years.As a result,the manufacturing equipment has no resale value.Following is the most recent income statement for the facility: What would be the impact on Knoll's overall operating income if the manufacturing facility is eliminated?

• A)Increase by $81,800 per year
• B)Decrease by $241,000 per year
• C)Decrease by $226,600 per year
• D)Increase by $322,800 per year

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Definitions:

Chain Of Command

The formal line of authority, communication, and responsibility within an organization, usually depicted as a hierarchy from top to bottom.

Supervisors

Individuals within an organization responsible for overseeing the work of employees and ensuring tasks and goals are achieved.

Utilitarian Rule

A principle that dictates choosing actions that maximize happiness or benefit to the greatest number of people.

Greatest Good

A principle suggesting that actions should be evaluated based on their ability to produce the maximum amount of happiness or benefit for the greatest number of people.