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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: Avoidable
Diamond Company has three product lines, A, B, and C. The following financial information is available: Item Sales Variable costs Contribution margin Fixed costs: Avoidable Unavoidable Pre-tax operating income Product Line A $60,000 $36,000 $24,000 Product Line B $120,000 $ 64,000 $ 56,000 Product Line C $27,000 $16, 875 $10,125 $ 5,800 $ 4,500 $13,700 $ 16,500 $ 12,000 $ 27,500 $ 7,500 $ 3,500 $ (-875) Diamond Is thinking of dropping Product Line C because it is reporting an operating loss. Assuming the company drops Product Line C and does not replace it, pre-tax operating income for the firm will likely Multiple Choice Be unchanged Increase by $2.325 Increase by $2,625
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