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Diamond Company has three product lines, A, B, and C. The following financial information is available: Product Line A $68,000 $40,800 $27,200 Product Line B
Diamond Company has three product lines, A, B, and C. The following financial information is available: Product Line A $68,000 $40,800 $27,200 Product Line B $140,000 $ 75,000 $ 65,000 Product Line C $31,000 $19,375 $11,625 Item Sales Variable costs Contribution margin Fixed costs: Avoidable Unavoidable Pre-tax operating income $ 6,200 $ 4,900 $16,100 $ 18,500 $ 14,000 $ 32,500 $ 8,700 $ 3,900 $ (-975) 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 $2,625 o Increase by $2,925 o O Decrease by $2,925 o Decrease by $5,550
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