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Rings Company has three product lines, A, B, and C. The following financial information is available: Item Product Line A Product Line B Product Line
Rings Company has three product lines, A, B, and C. The following financial information is available:
Item | Product Line A | Product Line B | Product Line C |
---|---|---|---|
Sales | $ 52,000 | $ 100,000 | $ 23,000 |
Variable costs | $ 31,200 | $ 53,000 | $ 14,375 |
Contribution margin | $ 20,800 | $ 47,000 | $ 8,625 |
Fixed costs: | |||
Avoidable | $ 5,400 | $ 14,500 | $ 6,300 |
Unavoidable | $ 4,100 | $ 10,000 | $ 3,100 |
Pre-tax operating income | $ 11,300 | $ 22,500 | $ (775) |
If Product Line C is discontinued and the manufacturing space formerly devoted to this line is rented for $6,000 per year, pre-tax operating income for the company will likely:
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