A Company Has Two Different Products That Are Sold in Different

question 117

Multiple Choice

A company has two different products that are sold in different markets.Financial data are as follows:
$$\begin{array} { | l | l | l | l | } \hline & \text { Product A } & \text { Product B } & \text { Total } \\\hline \text { Revenue } & \$ 15,000 & \$ 9300 & \$ 24,300 \\\hline \text { Variable cost } & ( 7000 ) & ( 9800 ) & ( 16,800 ) \\\hline \text { Fixed cost (allocated) } & \$ 2000 ) & \$ 2100 ) & ( 4100 ) \\\hline \text { Operating income } & \$ 6000 & ( \$ 2600 ) & \$ 3400 \\\hline\end{array}$$
Assume that fixed costs of $2000 could be eliminated if product B was dropped.Assume furthermore that dropping one product would not impact sales of the other.If Product B is dropped,what would be the impact on total operating profit of the company?

• A) increase $500
• B) increase $2000
• C) increase $2500
• D) increase $2100

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Definitions:

Aggression

A range of behaviors that can result in both physical and psychological harm to oneself, others, or objects in the environment.

Just-World Phenomenon

The belief that the world is fundamentally just, leading individuals to rationalize an undeserved fate for others as deserved.

Hindsight Bias

The tendency to believe, after learning an outcome, that one would have foreseen it.

Scapegoating

The practice of unfairly blaming an individual or group for problems or negative outcomes, often without justification.