DROMID Company has three product linesMeat, Fish and Eggs. The following information is available:

	Meat	Fish	Eggs
Sales	$2,000,000	$900,000	$800,000
Variable costs	(680,000)	(320,000)	(520,000)
Contribution margin	1,320,000	580,000	280,000
Fixed expenses	(460,000)	(140,000)	(440,000)
Operating income (loss)	$860,000	$440,000	($160,000)

QUESTION ON DROMID COMPANY

33)

Assume that all fixed expense are not avoidalable.

What will happen the Operating income of DROMID Company if it drops both the Meat and Fish product lines?

Select one:

a. None of these answers

b. Operating income will decrease by $1,960,000

c. Operating income will decreae by $1,280,000

d. Operating Income will decrease by $1,900,000

e. Operating income will decrease by $1,080,000

34)

Assume that

(i) half the fixed expenses for the Eggs product line are avoidable and the other half are not avoidable,

(ii) if the Eggs division is dropped, Dromid Company can lease the space previosuly used to produce Eggs for $300,000 each year.

Based on these assumptions, what will happen the Operating Income of Dromid Company if the Eggs product line is dropped?

Select one:

a. Operating income will increase by $405,000

b. Operating income will decrease by $110,000

c. Operating Income will increase by $240,000

d. Operating income will increase by $300,000

e. None of these answers

35)

Assume that

(i) none of the fixed expenses for the Eggs product line are avoidable

(ii) if the Eggs product line is dropped, Dromid Company will be able to lease the space previously used to produce Eggs for $150,000 each year

(iii) if the Eggs poduct line is dropped, sales of the Fish product line will double (fixed expenses for the Fish division will not be impacted)

Based on these assumptions, what will the total Operating Income of Dromid Company be if the Eggs division is dropped?

Select one:

a. $1,930,000

b. $1,430,000

c. None of these answers

d. $1,590,000

e. $1,570,000