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28.A company produces two kinds of can openers: one with longer handles and one with shorter handles. The longer opener uses better materials and has

28.A company produces two kinds of can openers: one with longer handles and one with shorter handles. The longer opener uses better materials and has a better design for hand support. During the past year, 200,000 shorter openers and 50,000 longer openers were produced and sold. Fixed costs amount to $500,000. If the shorter openers were dropped from production, $180,000 of the fixed costs would be avoided. If the longer openers were dropped, $90,000 of the fixed costs would be avoided.

Shorter Longer

Variable expenses/unit $40 $86

Sales price/unit $44 $90

The contribution margin of the shorter and longer can openers, respectively is

a.

$200,000/$800,000

c.

$8000,000/$4,300,000

b.

$620,000/110,000

d.

$800,000/$200,000

. If the company stops producing the longer opener, what will be the effect on the companys income?

a.

Decrease by $200,000

c.

Decrease by $800,000

b.

Decrease by $110,000

d.

Decrease by $620,000

. If the company stops producing the shorter opener, what effect on company income?

a. Decrease by $200,000 c. Decrease by $800,000

b. Decrease by $110,000 d. Decrease by $620,000

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