The Following Information Relates to Next Year's Projected Operating Results

question 6

Multiple Choice

The following information relates to next year's projected operating results of the Consumer Division of Xampa Corporation: If the Consumer Division is eliminated, $1, 600, 000 of the above fixed expenses could be avoided.What will be the effect on Xampa's profit next year if Consumer Division is eliminated?

• A)$300, 000 increase
• B)$300, 000 decrease
• C)$200, 000 decrease
• D)$200, 000 increase

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Definitions:

Infractions

Minor violations or breaches of law which are typically punishable by fines rather than prison time.

Misdemeanors

Less serious criminal offenses that are punishable by fines or imprisonment for less than a year, typically in a county jail.

Act of Commission

A positive action or deed that violates a law or legal obligation, leading to liability.

Act of Omission

Failure to take an action that is legally or morally required, leading to harm or injury.