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The managers of Adamson Apple Company are considering dropping one of their product lines. The product line typically has the following revenue and costs: Sales

The managers of Adamson Apple Company are considering dropping one of their product lines. The product line typically has the following revenue and costs: Sales $100,000 Variable costs 80,000 Contribution margin 20,000 Fixed costs 25,000 Operating loss (5,000) If the product line is discontinued , $4,000 of the fixed costs would be avoided . Also, the freed-up capacity would generate 44,000 of additional contribution margin from the expansion of other product line. If Adamson discontinues the product line, the effect on overall income will be a a . $12,000 decrease b . $8,000 decrease. . $ 9,000 increase . d . $3,000 increase.

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