Ace Company has two product lines. The following income statements are shown for its two product lines and the company as a whole. Total Office Supplies $250,000 100,000 Sales Less: Variable expenses Contribution margin Less: Fixed expenses Operating income Computer $360,000 265,000 $95,000 150,000 (55.000 $150,000 70,000 $80.000 $610,000 365,000 $245.000 220,000 $25,000 Additional information Management estimates that the dropping of the Computer product line would result in a 10% decrease in sales in the Office Supplies product line * If the Computer product line is dropped, 80% of the Computer product line's fixed expenses will be eliminated If the Computer product line is dropped, the company's profit will: O A Decrease by 525.000 O B. Increase by $10.000 OC. Decrease of 55.000 O Increase by $55.000 on comprodon se QUESTION 39 Faxaco has the following cost information regarding a component to be used in making its product, fax machine. The company has a capacity of manufacturing the component up to 900 units. The manufacturing costs for making 900 units are: Direct materials and labor $1,800 ($2 per unit) Variable overhead $2,700 (53 per unit) Fixed overhead $9.000 ($10 per unit) $40% of fixed overhead would continue, even though the component is purchased from outside If the component is not manufactured the facilities can be rented for $7.200. An outside vendor, Fast Company has offered to provide Faxaco with the component for $16 cach. Facaco is making a Make or Buy decision. Compared to "Make", "Buy" is O A $2,400 wone O B. $2,700 better OC 56,300 woe O 0.5900 wore O E 3900 better