A Study Has Been Conducted to Determine If One of the Departments

question 5

Multiple Choice

A study has been conducted to determine if one of the departments in Parry Company should be discontinued. The contribution margin in the department is $50,000 per year. Fixed expenses charged to the department are $65,000 per year. It is estimated that $40,000 of these fixed expenses could be eliminated if the department is discontinued. These data indicate that if the department is discontinued, the company's overall net operating income would:

• A) decrease by $25,000 per year
• B) increase by $25,000 per year
• C) decrease by $10,000 per year
• D) increase by $10,000 per year

---

Definitions:

Beef Consumption

The quantity of beef eaten over a particular period of time by an individual or population.

Nutrition Records

Documentation of food and beverage intake by an individual or group, used for analyzing nutritional status or research purposes.

Confidence Bound

The upper or lower limit of a confidence interval, representing the range within which a population parameter is estimated to lie with a certain level of confidence.

Sailboat Owners

Individuals who own and possibly operate sailboats, typically as a hobby or for sport.