A Company Has Two Different Products That Are Sold in Different

question 144

Multiple Choice

A company has two different products that are sold in different markets.Financial data are as follows: $$\begin{array} { | l | r | r | r | } \hline & \text { Product A } & \text { Product B } & \text { Total } \\\hline \text { Revenue } & \$ 16,000 & \$ 9,400 & \$ 25,400 \\\hline \text { Variable cost } & ( 9,000 ) & ( 9,900 ) & ( 18,900 ) \\\hline \text { Fixed cost (allocated) } & \$ 3,000 ) & \underline { ( 2,100 ) } & \underline { ( 5,100 ) } \\\hline \text { Operating income (loss) } & \$ 4,000 & \$ ( 2,600 ) & \$ 1,400 \\\hline\end{array}$$ Assume that fixed costs are all unavoidable and that dropping one product would not impact sales of the other.If Product B is dropped,what would be the impact on total operating income of the company?

• A)increases by $2,100
• B)increases by $500
• C)decreases by $2,100
• D)decreases by $500

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Definitions:

Cerebrum

The largest part of the brain, responsible for voluntary movements, sensory processing, and higher functions like thought and emotion.

Midsagittal Section

A cut or section of the body (or an organ) that divides it into equal right and left halves, also known as the median plane.

Right Half

The term "right half" typically refers to the right side portion of an object, area, or body, defined when facing the same direction as the object.

Diencephalon

A division of the brain that contains structures such as the thalamus and hypothalamus, crucial for sensory and emotional processing.