Hancock Company manufactures and sells two lines of furniture,case goods and upholstery.During the most recent accounting period,the Case Goods and Upholstery Divisions sold 15,000 and 2,000 units,respectively.The company's most recent financial statements are shown below (Do not round intermediate calculations. ):

\begin{array}{c}\begin{array}{|l|}\hline\\\hline \text { Sales}\\\hline \text { Less cost of goods sold:}\\\hline \text { Unit-level production cost}\\\hline \text { Depreciation, production equipment}\\\hline \text { Gross margin}\\\hline \text { Less operating expenses:}\\\hline \text { Unit-level selling and admin. Costs}\\\hline \text { Corporate-level facility expenses (fixe d)}\\\hline \text { Net income (loss)}\\\hline \end{array}\begin{array}{ll|}\hline \text { Case Goods}\\\hline \$ 1,600,000 \\\hline\\\hline1,000,000 \\\hline 240,000 \\ \hline \$ \quad 360,000\\\hline\\\hline60,000 \\ \hline52,000 \\ \hline \$ 248,000 \\ \hline \end{array}\begin{array}{ll|}\hline \text {Upholstery}\\\hline\$ 400,000 \\\hline\\\hline240,000 \\ \hline60,000 \\ \hline \$ \quad 100,000\\\hline\\\hline50,000 \\\hline 52,000 \\ \hline\$ \quad(2,000) \\\hline \end{array} \end{array}

If unit sales for both divisions increased 10%,the company would report which of the following? The word "Costs" should not be capitalized mid-way down.Also,change "admin." to:
Administrative
The cell should read:
Unit-level selling and administrative costs
A) A $52,000 increase in net income for the Upholstery Division
B) A 10% increase in total net income of the company
C) A decline in profit for the Upholstery Division.
D) A net income for the Upholstery Division of $9,000
The word "Costs" should not be capitalized mid-way down.Also,change "admin." to:
Administrative
The cell should read:
Unit-level selling and administrative costs

Select the Incorrect Statement Regarding Relevant Costs and Revenues

Multiple Choice

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