Answer the Following Questions Using the Information Below

question 129

Multiple Choice

Answer the following questions using the information below:
Martha Manufacturing produces a single product that sells for $80. Variable costs per unit equal $32. The company expects total fixed costs to be $72,000 for the next month at the projected sales level of 2,000 units. In an attempt to improve performance, management is considering a number of alternative actions. Each situation is to be evaluated separately.
-Suppose that management believes that a 10% reduction in the selling price will result in a 10% increase in sales. If this proposed reduction in selling price is implemented:

• A)operating income will decrease by $8,000
• B)operating income will increase by $8,000
• C)operating income will decrease by $16,000
• D)operating income will increase by $16,000

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Definitions:

Reactive

Responding to stimuli or events after they have occurred, as opposed to taking initiative or acting in anticipation.

Punishment

A consequence that reduces the likelihood of a behavior being repeated, often involving unpleasant outcomes for the individual.

Conduct Disorder

A pattern of repetitive behavior where the rights of others or social norms are violated.

Oppositional-defiant Disorder

A childhood disorder characterized by defiant, disobedient, and hostile behaviors towards authority figures.