Question
Diamond Company has three product lines, A, B, and C. The following financial information is available Article Product Line A Product Line B product line
Diamond Company has three product lines, A, B, and C. The following financial information is available
Article | Product Line A | Product Line B | product line C |
Sales | $30,000 | $45,000 | $12,000 |
Variable costs | $18,000 | $24,000 | $7,500 |
Contribution margin | $12,000 | $21,000 | $4,500 |
Fixed costs: | |||
Avoidable | $4,500 | $9,000 | $3,000 |
Inevitable | $3,000 | $4,500 | $2,000 |
operating income | $4,500 | $7,500 | ($500) |
Diamond is considering dropping the C product line because it reports an operating loss. Assuming the company eliminates product line C and does not replace it, what will be the company's operating income?
Step by Step Solution
3.44 Rating (151 Votes )
There are 3 Steps involved in it
Step: 1
ANSWER If Diamond Company eliminates product line C and does not r...Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get StartedRecommended Textbook for
Financial ACCT2
Authors: Norman H. Godwin, C. Wayne Alderman
2nd edition
9781285632544, 1111530769, 1285632540, 978-1111530761
Students also viewed these Accounting questions
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
View Answer in SolutionInn App