16. Only the variable costs identified with a prodact are relevant in a decision concerning whether to eliminate the product 17. A supk 18. Some managers believe that residual income is superior so return on investment as a means cost is a cost that has already been incurred and that cannot be avoided regardless of what action is chosen performance, since it encourages interests of the company as a whole. the manager to make investment decisions that are more consistent with the Multiple Choice: Fill in the cirele on your answer sheet that corresponds to the best response (2 points eachj 1. The manufacturing capacity of Jordan Company's facilities is 30,000 units a year. A summary of operating results for last year follows: Sales (18,000 units @ $100) $1,800,000 Variable costs Contribution margin - Fixed costs 990.000 810,000 Net operating income S 315,000 A foreign distributor has offered to buy 15,000 units at $90 per unit next year year to be 18,000 exceed capacity, what would be the total net operating income next year? (Assume that the total fixed costs would Jordan expects its regular sales next units. If Jordan accepts this offer and rejects some business from regular customers so as not to be the same no matter how many units are produced and sold.) a) $390,000. b) $705,000. c) $840,000. d) $855,000. 2. A study has been conducted to determine if Product A should be dropped Sales of the product total $200,000 per expenses total $140,000 per year. Fixed expenses charged to the product total $90,000 per year. The penses will continue even if the product is dropped. These data year, variable company estimates that $40,000 of these fixed ex indicate that if Product A is dropped, the company's overall net operating income a) decrease by $20,000 per year. b) increase by $20,000 per year c) decrease by $10,000 per year d) increase by $30,000 per year. 3. Which of the following are benefits of decentralization? I. Giving a manager of a division greater decision making control over his/her division provides vital IL. Managers at corporate headquarters have greater control in seeing that the goals of the company are IIL Added decision-making authority and responsibility often leads to increased job satisfaction and training for a manager who is on the rise in the company realized often persuades a manager to put forth hisher best efforts. a) Only I and II. b) Only II and III. c) Only I and II1. d) Only 1