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GarryVolchara [31]
3 years ago
11

The Draper Company is considering dropping its Doombug toy due to continuing losses. Revenue and costs data on the toy for the p

ast year follow: Sales of 15,000 units $150,000 less Variable expenses $120,000 = Contribution margin $30,000 less Fixed expenses $40,000 = Net operating loss ($10,000) If the toy were discontinued, then Draper could avoid $8,000 per year in fixed costs. Under the given conditions, the change in annual operating income from discontinuing the production and sale of Doombugs would be:
A. $30,000 decrease
B. $10,000 increase
C. $22,000 decrease
D. $18,000 increase
Business
1 answer:
tiny-mole [99]3 years ago
5 0

Answer:

Effect on income= -$22,000 decrease

Explanation:

Giving the following information:

Contribution margin $30,000

Fixed expenses ($40,000)

Net operating loss ($10,000)

<u>If a product line provides a positive contribution margin, generally it is convenient to continue production, at least in the short term.</u>

<u></u>

Effect on income= avoidable fixed costs - contribution margin

Effect on income= 8,000 - 30,000

Effect on income= -$22,000 decrease

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Unrealized holding gains or losses which are recognized in income are from debt securities classified as
Serga [27]

Answer:

Trading.

Explanation:

In Business management, when a gain or loss is realized, it simply means that the owner of stock or other securities has sold it. Thus, these unrealized gains or losses are generally referred to as paper profits or losses.

Basically, when the value of a stock being bought by an investor reduces (falls) while he or she is yet to sell it, it is known as an unrealized loss.

However, when the value of a stock being bought by an investor rises (increases) while he or she is yet to sell it, it is known as an unrealized gains.

Hence, unrealized holding gains or losses which are recognized in income are from debt securities classified as trading.

3 0
3 years ago
Crane Company had the following account balances:
aivan3 [116]

Answer:

The correct answer is $479,500.

Explanation:

According to the scenario, the computation of the given data are as follows:

We can calculate the total revenue by using following formula:

Total revenue = Net sale + Dividend revenue  + Rent revenue

Where, Net sales = Sales revenue - Sales return

= $445,000 - $34,000 = $411,000

By putting the value in the formula, we get

Total revenue = $411,000 + $10,500 + $58,000

= $479,500

4 0
3 years ago
Jefferson Tech Corp., a technology firm, has an internal search engine that helps employees find answers to queries. The search
Nimfa-mama [501]

Answer:

processing costs

Explanation:

Based on the information provided within the question it can be said that the cost incurred by Jefferson Tech Corp. is an example of processing costs. This term refers to the direct costs allocated to tools that allow the company to continue it's operations in an efficient manner. Therefore maintenance of the data management system (which is essential) are considered as processing costs.

7 0
3 years ago
At Sunland Company, events and transactions during 2020 included the following. The tax rate for all items is 20%. (1) Depreciat
e-lub [12.9K]

Answer:

B. $1673920

Explanation:

First calculate Total loss

$2000000 loss from disposal of a component of the business and loss of $92400 from strike by the employees of a supplier

$2000000 + $92400 = $2,092,400

20% of the loss =

20% × $2,092,400

= $418,480

Therefore the effect of these events and transactions on 2020 net income net of tax would = Total loss - 20% of total loss

$2,092,400 - $418,480

= $1,673,920

4 0
3 years ago
Select the statement that is true regarding pricing and competitors’ prices. a. Information about competitors’ prices is easily
vampirchik [111]

Answer: Marketers need demand-based price information in industries dominated by price competition.

Explanation: In a competitive market, marketers need to study the price of other marketers in the market. This would enable the marketers to know how to adjust their prices to attract customers to their products.

A competitive market is one which is controlled by the forces of demand and supply.

7 0
3 years ago
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