HiTech Manufactures Two Products: Regular and Super

question 63

Multiple Choice

HiTech manufactures two products: Regular and Super. The results of operations for 20x1 follow. Fixed manufacturing costs included in cost of goods sold amount to $3 per unit for Regular and $20 per unit for Super. Variable selling expenses are $4 per unit for Regular and $20 per unit for Super; remaining selling amounts are fixed.
HiTech wants to drop the Regular product line. If the line is dropped, company-wide fixed manufacturing costs would fall by 10% because there is no alternative use of the facilities. What would be the impact on operating income if Regular is discontinued?

• A) $0.
• B) $10,400 increase.
• C) $20,000 increase.
• D) $39,600 decrease.
• E) None of the other answers are correct.

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Definitions:

Particular Object

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Obsession

An obsession is a persistent, intrusive, and unwanted thought, urge, or image that causes significant anxiety or distress, often seen in disorders like obsessive-compulsive disorder (OCD).