The Managers of Adamson Apple Co

question 48

Multiple Choice

The managers of Adamson Apple Co. are considering dropping one of their product lines. The product line typically has the following revenue and costs: Sales $100,000
Variable costs 80,000
Contribution margin 20,000
Fixed costs 25,000
Operating loss $ (5,000)
If the product line is discontinued, $4,000 of the fixed costs would be avoided. Also, the freed-up capacity would generate $4,000 of additional contribution margin from the expansion of other product lines. If Adamson discontinues the product line, the effect on overall income will be:

• A)$12,000 decrease
• B)$8,000 decrease
• C)$9,000 increase
• D)$3,000 increase

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Definitions:

Diplomatic Isolation

A foreign policy strategy where a country is intentionally excluded from international diplomacy and negotiations by other countries, often to express disapproval of its policies or actions.

Real Whigs

The Real Whigs were a political movement in 18th-century Britain that opposed absolute monarchy and advocated for the rights and liberties of the common people, influencing American revolutionary thought.

Monarchical Government

A form of government where a monarch (king, queen, emperor) holds sovereign authority until death or abdication, often inheriting their position by birth.

Liberty

The state of being free within society from oppressive restrictions imposed by authority on one's way of life, behavior, or political views.