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.

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Definitions:

Nominal Group Technique

A structured brainstorming method for group decision-making that involves individuals generating ideas independently before sharing them collectively for consideration.

Single Thought Pattern

The tendency of an individual or group to focus on one particular idea or perspective, often to the exclusion of alternative viewpoints.

Social Loafing

The phenomenon where individuals exert less effort to achieve a goal when they work in a group than when they work alone.

Overt Judgments

Explicit and open evaluations or decisions about someone or something.