Bone Dry Retailers Is Considering Closing Down One of Its

question 30

Multiple Choice

Bone Dry retailers is considering closing down one of its low-profit departments. Assume that discontinuance of this department will not affect sales of the remaining departments. Which of the cost classifications below should be compared with departmental income to determine whether or not to close the department?

• A) Variable costs
• B) Avoidable costs
• C) Controllable costs
• D) Fixed costs

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Definitions:

Total Revenue

This is the total amount of money a firm receives from the sale of its products or services, calculated by multiplying the price per unit by the number of units sold.

Sellers' Total Revenue

The total amount of money received by sellers from selling a certain amount of goods and services.

Total Revenue

The complete revenue a firm earns from its sales of products or provision of services within a given period.

Elastic Demand

A situation in which the quantity demanded of a product changes significantly in response to changes in the product's price.