Craylon Manufacturing Produces a Single Product That Sells for $100

question 87

Multiple Choice

Craylon Manufacturing produces a single product that sells for $100.Variable costs per unit equal $25. The company expects total fixed costs to be $60,000 for the next month at the projected sales level of 1,000 units.In an attempt to improve performance,management is considering a number of alternative actions.Each situation is to be evaluated separately.What is the effect on operating income with the increase of advertising expenses?

• A) Operating income will decrease by $10,000.
• B) Operating income will increase by $11,000.
• C) Operating income will decrease by $18,000.
• D) Operating income will increase by $17,000.

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Definitions:

Erosion

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A potent greenhouse gas with a chemical formula CH4, produced by anaerobic decomposition of organic materials and other processes.

Ammonia

A compound of nitrogen and hydrogen with the formula NH3, known for its pungent smell and used in various industrial processes.

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