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Diamond Company has three product lines, A, B, and C. The following financial information is available Item Sales Variable costs Contribution margin Fixed costs: Product
Diamond Company has three product lines, A, B, and C. The following financial information is available Item Sales Variable costs Contribution margin Fixed costs: Product Line A $42,000 $25,200 $16,800 Product Line B $75,000 $40,000 $35,000 Product Line C $18,000 $11,250 $ 6,750 00:50:25 Avoidable Unavoidable 4,900 3,600 $ 8,300 $12,000 $7,500 $15,500 $ 4,800 $ 2,600 $ (650) Pre-tax operating income If Product Line C is discontinued and the manufacturing space formerly devoted to this line is rented for $6,000 per year, pre-tax operating income for the company will likely Multiple Choice Be unchanged-the two effects cancel each other out. 00:50:17 Increase by $6,750 Increase by some other amount. Increase by $4,050. Increase by $2,850
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