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Seneca College *

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440

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Business

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Nov 24, 2024

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11/20/23, 7:57 AM Chapter 9 Quiz https://www.ameengage.com/mod/quiz/review.php?attempt=4684875&cmid=1260545&page=6 1/2 English (en) English (en) Français - Canada (fr_ca) Dashboard / My courses / [Seneca 09/2023] HTM440NHA - Nardi / CHAPTER 9 - Relevant Costs and Business Strategies / Chapter 9 Quiz Question 7 Correct Mark 1.00 out of 1.00 A restaurant is considering dropping its breakfast meal period. On the segmented contribution margin income statement, breakfast shows a contribution margin of $100,000 and fixed costs of $180,000. If breakfast is dropped, the company would no longer incur any of breakfast’s total fixed costs of $180,000. Based on this information, which one of the following statements is false? Select one: a. Breakfast’s fixed costs of $180,000 are relevant to the decision. b. Keeping breakfast will increase the company’s operating income by $80,000. c. The restaurant’s operating income will change if breakfast is dropped. d. From a financial perspective, the restaurant should drop breakfast. Your answer is correct. Explanation: Dropping breakfast will increase the restaurant’s operating income by $80,000 [$180,000 savings in fixed costs – $100,000 lost contribution margin]. If breakfast is kept, breakfast will show an $80,000 operating loss. The correct answer is: Keeping breakfast will increase the company’s operating income by $80,000.
11/20/23, 7:57 AM Chapter 9 Quiz https://www.ameengage.com/mod/quiz/review.php?attempt=4684875&cmid=1260545&page=6 2/2 Français (fr)
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