Castillo Corporation Has Provided You with the Following Budgeted Income

question 148

Multiple Choice

Castillo Corporation has provided you with the following budgeted income statement for one of its products:

Castillo has just encountered environmental problems with the product and will be forced to drop the product line altogether.Castillo will be able to eliminate 75% of the fixed costs.What will be the impact on operating income of the company?

• A)Operating income will decrease by $232,500.
• B)Operating income will decrease by $37,500.
• C)Operating income will increase by $232,500.
• D)Operating income will increase by $37,500.

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Definitions:

Aided Recall

A measure of memory where participants are given cues or prompts to help them remember specific information, typically used in market research.

Sales Promotion

Marketing strategies aimed at stimulating demand by offering short-term incentives to buy a product or service.

Free Samples

Products offered to consumers at no cost to introduce a new product, encouraging trial and eventually boosting sales.

Coupon Fraud

The illegal practice of using counterfeit or altered coupons to purchase products or obtaining unauthorized discounts.