A Company Has Two Different Products That Are Sold in Different

question 123

Multiple Choice

A company has two different products that are sold in different markets.Financial data are as follows: $$\begin{array} { | l | r | r | r | } \hline & \text { Product A } & \text { Product B } & \text { Total } \\\hline \text { Revenue } & \$ 15,000 & \$ 9,500 & \$ 24,500 \\\hline \text { Variable cost } & ( 8,000 ) & ( 9,700 ) & ( 17,700 ) \\\hline \text { Fixed cost (allocated) } & \underline { ( 2,000 ) } & \underline { ( 2,000 ) } & \underline { ( 4,000 ) } \\\hline \text { Operating income (loss) } & \$ 5,000 & \$ ( 2,200 ) & \$ 2,800 \\\hline\end{array}$$ Assume that fixed costs of $4,000 could be eliminated if Product B was dropped.Assume furthermore 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 $4,000
• B)increases by $4,200
• C)increases by $200
• D)increases by $2,000

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Definitions:

Discriminated

Treated unfairly or prejudicially against an individual or group based on characteristics such as race, age, sex, or religion.

Performance Reviews

Formal assessments where an employee's job performance is evaluated, typically by their manager, against agreed standards.

Productivity

The measure of output per unit of input, reflecting the efficiency of production.

Discriminates

The act of unjustly distinguishing or treating people differently based on characteristics such as race, age, gender, etc.