Answer the Following Questions Using the Information Below:
Rockhampton Company

question 21

Multiple Choice

Answer the following questions using the information below:
Rockhampton Company has three products,X,Y and Z.The following information is available:
$$\begin{array} { l r r r } & \text { Product X } & \text { Product Y } & \text { Product Z } \\\text { Sales } & \$ 60000 & \$ 90000 & \$ 24000 \\\text { Variable costs } & \underline { 36000 } & \underline { 48000 } & \underline { 15000 } \\\text { Contribution margin } & 24000 & 42000 & 9000 \\\text { Fixed costs: } & & & \\\quad \text { Avoidable } & 9000 & 18000 & 6000 \\\quad \text { Unavoidable } & \underline { 6000 } & \underline { 9000 } & \underline { 5400 } \\\text { Operating profit } & \underline { \$ 9000 } & \$ 15000 & \$ ( 2400 ) \end{array}$$
-Rockhampton Company is thinking of dropping Product Z because it is reporting a loss.Assuming Rockhampton drops Product Z and does not replace it,operating profit will:

• A)decrease by $5400.
• B)increase by $2400.
• C)decrease by $3000.
• D)increase by $3000.

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Definitions:

IQ

Short for Intelligence Quotient, a measure of a person's intelligence as indicated by an intelligence test, compared to the average for people of their age.

Chronological Age

The measure of an individual's age based on the calendar date from their date of birth.

Intelligence Quotient

A standardized measure of human intelligence based on a series of tests that assess cognitive abilities in relation to an age group.

William Stern

A German psychologist best known for developing the concept of the intelligence quotient (IQ) and for his significant contributions to differential psychology and personality theory.