Claris Corporation (A Multi-Product Company) Produces and Sells 7,000 Units

question 120

Multiple Choice

Claris Corporation (a multi-product company) produces and sells 7,000 units of Product X each year. Each unit of Product X sells for $12 and has a contribution margin of $4. If Product X is discontinued, $19,000 of the $32,000 in fixed costs charged to Product X could be eliminated. If Product X is discontinued, the company's overall operating income would:

• A)decrease by $4,000 per year.
• B)increase by $4,000 per year.
• C)decrease by $9,000 per year.
• D)increase by $9,000 per year.

---

Definitions:

Thematic Apperception Test

A projective psychological test that involves creating stories about ambiguous scenes, used to explore a person's emotions and personality.

Ambiguous Pictures

Images that can be interpreted in more than one way or have a vague or unclear meaning.

Hindsight Bias

Hindsight bias refers to the common tendency to believe, after an event has occurred, that one would have predicted or expected the outcome.

Interpretation of the Past

The process of understanding and explaining historical events, contributions, or phenomena.