Billings Company Has Developed the Following Budgeted Income Statement The Company Is Experimenting with New Engineering Techniques and Believes

question 44

Multiple Choice

Billings Company has developed the following budgeted income statement: $\begin{array}{lrr} \text {Sales Revenue \( (2,300 \) units \( \times \$ 14 \) sales price) } &\$32,200\\ \text { Total Variable Expenses (2,300 \( \$ 6 \) per unit) } &\underline{(13,800) }\\ \text { Contribution Margin} &18,400\\ \text {Fixed Expenses } &\underline{(10,000) }\\ \text {Net Income } &\underline{\$8,400}\\\end{array}$

The Company is experimenting with new engineering techniques and believes it can reduce variable cost to $4.50 per unit and significantly improve the product.The innovations would double fixed costs but the company expects to be able to increase sales to 3,500 units.If this strategy is pursued the company's budgeted net income will:

• A) decrease by $4,250.
• B) increase by $4,850.
• C) increase by $13,250.
• D) decrease by $4,150.

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Definitions:

Minor Term

The term that appears as the subject in the conclusion of a categorical syllogism and in one of the premises.

Middle Term

In a syllogism, the term that appears in both premises but not in the conclusion, serving as the link between the major and minor premises.

Categorical Syllogism

A form of deductive reasoning consisting of three propositions: two premises and a conclusion, each stating something about categories of things.

Mood

In logic, the mood of a categorical syllogism refers to the arrangement or type of the categorical propositions (A, E, I, O) it contains.