Question
1. Shine Bright Company has three product lines-D, E, and F. The following information is available: D E F Sales $60,000 $38,000 $26,000 Variable costs
1. Shine Bright Company has three product lines-D, E, and F. The following information is available: D E F Sales $60,000 $38,000 $26,000 Variable costs 36,000 18,000 12,000 Contribution margin 24,000 20,000 14,000 Fixed expenses 12,000 15,000 16,000 Operating income (loss) $12,000 $5,000 $(2,000) Shine Bright Company is thinking of dropping product line F because it is reporting an operating loss. Assuming fixed costs are unavoidable, if Shine Bright Company drops product line F and does not replace it, what effect will this have on operating income? Should they drop Product F?
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