Central Industries Has Three Product Lines: A,B and C Central Industries Is Thinking About Dropping Product C Because It

question 11

Multiple Choice

Central Industries has three product lines: A,B and C.The following information is available:
$\begin{array}{llll}&\text { Product A }&\text { Product B }&\text { Product C }\\\text { Sales } & \$ 100,000 & \$ 90,000 & \$ 44,000 \\\text { Variable costs } & 76,000 & 48,000 & 35,000 \\\text { Contribution margin } & 24,000 & 42,000 & 9,000 \\\text { Avoidable fixed costs } & 9,000 & 18,000 & 3,000 \\\text { Unavoidable fixed costs } & \underline{6,000} & \underline{9,000} & \underline{7,700}\\\text { Operating income(loss) }&\$9,000&\$15,000&\$(1,700) \end{array}$
Central Industries is thinking about dropping Product C because it is reporting a loss.Assume Central Industries drops Product C and does not replace it.What will happen to operating income?

• A) increase by $600
• B) increase by $2,400
• C) decrease by $6,000
• D) decrease by $9,000

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Definitions:

Decision-Making Process

The cognitive and logical sequence of steps by which individuals select among options and take action.

Communication Improvement

Communication improvement involves enhancing the effectiveness and efficiency of conveying information and understanding between individuals or groups.

Reciprocal Goal

A mutual agreement or shared aim between two or more parties, particularly in a counseling or therapeutic context, to work towards a common objective.

Interrupting

The act of stopping a process or activity temporarily or permanently, often used in communication as a method to clarify or redirect conversation.