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Maizy Productions has three models: D, E, and F. The following information is available: Sales revenue Variable expenses Contribution margin Fixed expenses Operating income (loss)
Maizy Productions has three models: D, E, and F. The following information is available: Sales revenue Variable expenses Contribution margin Fixed expenses Operating income (loss) Model D $67,000 $32,000 $35,000 $16,000 $19,000 Model E $37,000 $13,000 $24,000 $16,000 $8,000 Model F $24,000 $14,000 $10,000 $16,000 $(6,000) Maizy Productions is thinking of discontinuing model F because it is reporting an operating loss. All fixed costs are unavoidable. Maizy Productions discontinues model F and rents the space formerly used to produce product F for $19,000 per year, what effect will this have on operating income? A. Decrease $9,000 B. Increase $30,000 C. Decrease $30,000 D. Increase $9,000
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