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lutik1710 [3]
3 years ago
15

The management of Furrow Corporation is considering dropping product L07E. Data from the company’s budget for the upcoming year

appear below:
Sales $ 950,000
Variable expenses $ 380,000
Fixed manufacturing expenses $ 362,000
Fixed selling and administrative expenses $ 242,000
In the company's accounting system all fixed expenses of the company are fully allocated to products. Further investigation has revealed that $217,000 of the fixed manufacturing expenses and $178,000 of the fixed selling and administrative expenses are avoidable if product L07E is discontinued.
1. The financial advantage (disadvantage) for the company of eliminating this product for the upcoming year would be______:
Multiple Choice
A. $(34,000)
B. $175,000
C. $34,000
D. $(175,000)
Business
1 answer:
Maru [420]3 years ago
7 0

Answer:

Sales                                                                              950,000

Less: Relevant cost:

Variable expenses                                                         380,000

Avoidable fixed manufacturing expenses                    217,000

Avoidable fixed selling and administrative expenses  178,000

Contribution                                                                    175,000

The total profit of Furrow Corporation reduces by $175,000 if the product is discontinued.

Explanation:

In this question, there is need to determine contribution, which is the excess of sales over relevant costs. Relevant costs are comprised of variable cost and avoidable fixed costs. The product should not be discontinued since the contribution is positive. Deleting a product with positive contribution reduces the total profit of the company by the amount of positive contribution.

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D. the price level is likely to rise as GDP rises.

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The aggregate demand measures all the goods produced in an economy at a given price in a particular period.

When the aggregate demand increases, the aggregate demand curve shifts to the right. When aggregate demand increases, aggregate demand exceeds aggregate supply and aggregate price and output would increase.

7 0
3 years ago
I need help!!
borishaifa [10]

Answer:

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4 0
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Druganaut company buys a $21,000 van on credit. the transaction will affect the
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The balance sheet shows assets, liabilities, and stockholder's equity. Buying the van on credit would be a liability.

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3 years ago
Give an example of a natural monopoly industry operating in South Africa.
MariettaO [177]

An example of a natural monopoly industry operating in South Africa include "Eskom".

<h3>What is natural monopoly?</h3>

A natural monopoly occurs when there is an instance in which it is economically viable and better for a single entity to be in full and sole control of the production of a product or service.

Moreover, a natural monopoly is the fact that natural monopolies have extreme economies of scale. It can only start to become profitable when one single firm is able to service the majority of the market.

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4 0
2 years ago
A worker wants to set aside some money for retirement, hoping to live off the interest income. If the interest rate is 10% and t
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Answer:

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