Alvarez Company Is Facing an $8 Increase in the Variable

question 17

Multiple Choice

Alvarez Company is facing an $8 increase in the variable costs of producing one of its products for the upcoming year.As a result,the sales manager has made a proposal to increase the sales price of the product while increasing the advertising budget at the same time.The sales price increase will lower sales volume,but the other changes may help the company maintain its profit margin.Alvarez has provided the following information regarding the current year results and the proposal made by the sales manager:

Relative to the current year,the sales manager's proposal will ________.

• A)decrease operating income by $324,000
• B)increase contribution margin by $196,000
• C)decrease the unit breakeven point
• D)decrease operating income by $196,000

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Definitions:

Morphine

A potent opiate analgesic drug derived from the opium poppy used for pain relief.

Heroin

An opioid drug derived from morphine, highly addictive and illegal, commonly used for its euphoric effects.

REM Sleep

A stage of sleep characterized by rapid eye movements, during which the most vivid dreams occur, and is considered important for emotional regulation and memory consolidation.

Depression

A mental health condition characterized by persistent feelings of sadness, hopelessness, and a lack of interest or pleasure in activities.