How might the e-waste factory affect ABC's income statement?

• A. It will automatically double profits.
• B. It may increase revenue through gold sales and raise costs through labor, equipment, and operations, affecting profit overall.
• C. It will only increase revenue with no cost impacts.
• D. It will decrease revenue but increase costs.

Answer: (B)

The key idea is that adding an e-waste factory changes both revenue and costs. If ABC can sell recovered gold and other materials, that creates additional revenue on the income statement. At the same time, running the factory brings new costs—labor, equipment purchase and depreciation, maintenance, energy, and other operating expenses. Profit is what remains after subtracting costs from revenue, so the overall impact depends on whether the extra revenue from gold sales exceeds the extra costs. That balance is exactly what option describes: revenue may rise through gold sales, costs may rise through labor, equipment, and operations, and the net effect on profit will depend on the difference. It isn’t guaranteed to double profits, it isn’t only revenue with no costs, and it isn’t necessarily a decrease in both revenue and an increase in costs.