The Draper Corporation is considering dropping its Doombug toy due to continuing losses. Data on the toy for the past year follow:
If the toy were discontinued, Draper could avoid $8,000 per year in fixed costs. The remainder of the fixed costs are not avoidable.
-The annual financial advantage (disadvantage)for the company from discontinuing the production and sale of Doombugs would be:
A) ($30,000)
B) $10,000
C) ($22,000)
D) $18,000

Question

The Draper Corporation is considering dropping its Doombug toy due to continuing losses. Data on the toy for the past year follow:
  If the toy were discontinued, Draper could avoid $8,000 per year in fixed costs. The remainder of the fixed costs are not avoidable.
-The annual financial advantage (disadvantage)for the company from discontinuing the production and sale of Doombugs would be:
A) ($30,000) 
B) $10,000 
C) ($22,000) 
D) $18,000

Quizplus · Accepted Answer

11ea7761_1608_58ac_81a5_09927b761d4b_TB2580_00 If the product is discontinued, the company will be giving up the annual profit of $22,000 from the toy.

The Draper Corporation Is Considering Dropping Its Doombug Toy Due