Product Q77H Has Been Considered a Drag on Profits at Zenke

question 2

Multiple Choice

Product Q77H has been considered a drag on profits at Zenke Corporation for some time and management is considering discontinuing the product altogether. Data from the company's accounting system appear below: In the company's accounting system all fixed expenses of the company are fully allocated to products. Further investigation has revealed that $71,000 of the fixed manufacturing expenses and $43,000 of the fixed selling and administrative expenses are avoidable if product Q77H is discontinued. What would be the effect on the company's overall net operating income if product Q77H were dropped?

• A)Overall net operating income would decrease by $95,000.
• B)Overall net operating income would increase by $95,000.
• C)Overall net operating income would increase by $4,000.
• D)Overall net operating income would decrease by $4,000.

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Definitions:

Psychoanalysis

A therapeutic approach and theory of psychology developed by Sigmund Freud, focusing on unconscious motivations and conflicts as drivers of human behavior.

Sigmund Freud

An Austrian neurologist and the founder of psychoanalysis, a clinical method for treating psychopathology through dialogue between a patient and a psychoanalyst.

Psychotherapy

A therapeutic treatment involving psychological methods, typically involving conversations between a therapist and a client, to address mental health issues or problems.

Learning Theorists

Researchers and psychologists who study how people learn and acquire knowledge, focusing on the processes of learning and behavior change.