The Management of Freshwater Corporation Is Considering Dropping Product C11B

question 32

Multiple Choice

The management of Freshwater Corporation is considering dropping product C11B. Data from the company's accounting system appear below: All fixed expenses of the company are fully allocated to products in the company's accounting system. Further investigation has revealed that $211,000 of the fixed manufacturing expenses and $122,000 of the fixed selling and administrative expenses are avoidable if product C11B is discontinued.
-What would be the effect on the company's overall net operating income if product C11B were dropped?

• A)Overall net operating income would decrease by $188,000.
• B)Overall net operating income would increase by $74,000.
• C)Overall net operating income would decrease by $74,000.
• D)Overall net operating income would increase by $188,000.

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Definitions:

Whisk Ferns

Primitive, seedless vascular plants belonging to the genus Psilotum, characterized by their simple, whisk-like appearance without true leaves or roots.

Dichotomous Branching

A form of plant or fungal growth where branches repeatedly divide into two parts, leading to a 'Y'-shaped pattern.

Xylem

The vascular tissue in plants responsible for the conduction of water and nutrients from the roots to the rest of the plant.

Dissolved Sugars

Dissolved sugars are sugar molecules that have been dissolved in a liquid, forming a solution commonly important in both biological processes and food science.