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Evergreen Corporation manufactures and sells a number of trees, including Pine trees. Results for la year for the manufacture and sale of Pine trees are

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Evergreen Corporation manufactures and sells a number of trees, including Pine trees. Results for la year for the manufacture and sale of Pine trees are as follows: $750,000 Sales ...... Less expenses: Variable production costs Sales commissions .......... Salary of product manager ............ Fixed product advertising ........... Fixed manufacturing overhead....... Net operating loss......... $450,000 110,000 95,000 80,000 70,000 805.000 $(55,000) Evergreen Corporation is trying to decide whether or not to discontinue Pine tree product line. All expenses other than fixed manufacturing overhead are avoidable if the product is dropped. Fixed manufacturing overhead is not avoidable. Assume that dropping pine tree product line will have no effect on other product lines. If the company drops pine trees, the change in annual net operating income due to this decision will be a: $40,000 decrease $10,000 decrease $15.000 decrease $55.000 increase

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