A Proposal Has Been Made That Will Lower Variable Expenses

question 15

Multiple Choice

A proposal has been made that will lower variable expenses in Store A to 62% of sales. However, this reduction can only be accomplished by an increase in Store A's traceable fixed expenses of $8,000. If this proposal is implemented and sales remain constant, overall company net operating income should:

• A)remain the same
• B)decrease by $4,200
• C)increase by $2,000
• D)increase by $8,000

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Definitions:

Increase Unemployment

A scenario where the number of unemployed individuals in the workforce rises, which can result from various factors including economic downturns, technological changes, or regulatory actions.

Natural Rate

A term often used to refer to the natural rate of unemployment, which is the level of unemployment consistent with a stable rate of inflation.

Frictional Unemployment

Short-term unemployment that arises from the process of workers moving between jobs, including fresh entrants to the labor market.

Labor Unions

Organizations formed by workers from related fields that work for the collective rights of the members, including better wages, working conditions, and benefits.