DM Corporation Has Provided You with the Following Budgeted Income

question 157

Multiple Choice

DM Corporation has provided you with the following budgeted income statement for one of its products: $\begin{array}{|l|r|}\hline\text { Sales revenue } & \$ 700,000 \\\hline \text { Variable costs } & (430,000) \\\hline \text { Contribution margin } & \$ 270,000 \\\hline \text { Fixed costs } & \underline{(320,000} \\\hline \text { Operating loss } & \$(50,000 \\\hline\end{array}$ DM has just encountered environmental problems with the product and will be forced to drop the product line altogether.DM will be able to eliminate 70% of the fixed costs.What will be the impact on operating income of the company?

• A)Operating income will decrease by $224,000.
• B)Operating income will decrease by $46,000.
• C)Operating income will increase by $224,000.
• D)Operating income will increase by $46,000.

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Definitions:

Uterus

A major female hormone-responsive reproductive sex organ of most mammals, including humans, responsible for gestating embryos and fetuses.

Implantation

The process by which a fertilized egg attaches itself to the wall of the uterus where it can then begin to develop into an embryo.

Uterus

A muscular organ of the female reproductive system, where fertilized eggs implant and develop into a fetus.

Uterine Tube

Also known as the fallopian tube, it is a pair of tubes leading from the ovaries to the uterus, playing a key role in the journey of the egg and site of fertilization.