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Percy Productions has three models: D, E, and F. The following information is available: Sales revenue Variable expenses Contribution margin Fixed expenses Operating income (loss)
Percy 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 $70,000 $32,000 $38,000 $19,000 $19,000 Model E $34,000 $13,000 $21,000 $19,000 $2,000 Model F $24,000 $14,000 $10,000 $19,000 $(9,000) Percy Productions is thinking of discontinuing model F because it is reporting an operating loss. All fixed costs are unavoidable. Percy Productions discontinues model F and rents the space formerly used to produce product F for $15,000 per year, what effect will this have on operating income? O A. Decrease $5,000 O B. Increase $17,000 C. Increase $5,000 OD. Decrease $17,000
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