The Tangier Company Is Considering Eliminating the Following Product Line

question 6

Multiple Choice

The Tangier Company is considering eliminating the following product line: What amount of cost is avoidable if Tangier outsources production of this product?
$\begin{array}{|l|c|}\hline &{\text { Product AXP }} \\\hline \text { Sales } & \$ 80,000 \\\hline{\text { Less variable costs: }} \\\hline \text { Raw materials } & 50,000 \\\hline \text { Direct labor } & 10,000 \\\hline \text { Contribution margin } & \$ 20,000 \\\hline{\text { Less fixed costs: }} \\\hline \text { Production costs allocated to products } & 30,000 \\\hline \text { Profit (Loss) } & \$ (10,000) \\\hline\end{array}$

• A)$60,000
• B)$50,000
• C)$90,000
• D)$20,000

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Definitions:

Portfolio Beta

Portfolio beta measures the sensitivity of a portfolio's returns to movements in the market index. A beta greater than one indicates higher volatility than the market, while a beta less than one indicates lower volatility.

Betas

An indicator of the level of fluctuation or inherent risk in a security or portfolio relative to the broader market.

Factor Portfolio

An investment strategy focusing on specific drivers of returns, such as size, value, and momentum, to achieve targeted outcomes.

Well-diversified Portfolio

A portfolio that includes a wide variety of investments across different asset classes in order to reduce risk.