Question
Black Productions has three models: D, E, and F. The following information is available: Sales revenue: Variable expenses Contribution margin Fixed expenses Operating income (loss)
Black Productions has three models: D, E, and F. The following information is available: Sales revenue: Variable expenses Contribution margin Fixed expenses Operating income (loss) Model D Model E Model F $65,000 $33,000 $24,000 $32,000 $13,000 $14,000 $33,000 $20,000 $10,000 $16,000 $16.000 $16,000 $17,000 $4,000 $(6,000) * Black Productions is thinking of discontinuing model F because it is reporting an operating loss. All fixed costs are unavoidable. Assume Black Productions is able to increase the sale price of product F to $35,000 with no change in volume of units sold and no change in variable costs or fixed costs. What effect will this have on operating income? OA. Decrease $24,000 OB. Decrease $11,000 OC. Increase $11,000 OD. Increase $24,000
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