Victor Corporation Has Provided You with the Following Budgeted Income

question 58

True/False

Victor Corporation has provided you with the following budgeted income statement for one of its products:
$\begin{array}{|l|r|}\hline \text { Sales revenue } & \$ 750,000 \\\hline \text { Variable costs } & \underline{500,000} \\\hline \text { Contribution margin } & \$ 250,000 \\\hline\text { Fixed costs } & 280,000 \\\hline \text { Operating income } & \\\text { (loss) } & (\$ 30,000 \\\hline\end{array}$
Victor Corporation believes that 65% of the fixed costs would be avoidable if the product line was dropped.Based on the impact on the company's operating income or loss,Victor should keep the product line.

---

Definitions:

Q

Generally denotes quantity in economic and mathematical models, referring to the amount of goods or services.

School of Thought

A particular philosophy or a specific way of thinking that is characteristic of a certain group or period.

Recession

A significant decline in economic activity spread across the economy, lasting more than a few months, typically visible in real GDP, real income, employment, industrial production, and wholesale-retail sales.

Velocity of Money

The rate at which money circulates in the economy, typically measured as the ratio of GDP to the national money supply.