Question
Mission Company has three product lines: D, E, and F. The following information is available: D E F Sales revenue $85,000 $47,000 $20,000 Variable expenses
Mission Company has three product lines: D, E, and F. The following information is available: D E F Sales revenue $85,000 $47,000 $20,000 Variable expenses $41,000 $24,000 $12,000 Contribution margin $44,000 $23,000 $ 8,000 Fixed expenses $12,000 $15,000 $17,000 Operating income (loss) $32,000 $ 8,000 $ (9,000) Mission Company is thinking of discontinuing product line F because it is reporting an operating loss. All fixed costs are unavoidable. Assuming Mission Company discontinues line F and is able to double the production and sales of product line E without increasing fixed costs. What effect will this have on operating income? A. Increase $15,000 B. Decrease $15,000 C. Increase $40,000 D. Increase $46,000
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