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:

Implicit Leadership Theories

Individual beliefs or assumptions about the traits and behaviors that make someone an effective leader, which can influence leadership assessments.

Monthly Loan Payment

The regular payment made to repay a loan, typically consisting of both principal and interest components, over a set period.

Bank

A financial institution licensed to receive deposits and make loans, and may offer various other financial services, such as wealth management, currency exchange, and safe deposit boxes.

Denial

The refusal to admit the truth or reality of something, often as a defense mechanism.