Tremaine Inc. has three product lines: A, B, and C.

	A		B		C		Total
Sales	$50,000		$85,000		$90,000		$225,000
Variable costs	30,000		30,000		44,000		104,000
Contribution margin	20,000		55,000		46,000		121,000
Fixed costs	23,000		25,000		18,000		66,000
Net income	$ (3,000)		$30,000		$28,000		$ 55,000

38. Management is considering dropping product line A. If it is discontinued, its fixed costs are all common fixed costs. The discontinuation of product line A would:

a. Increase net income by $2,600

b.

Decrease net income by $20,000.

c.

Increase net income by $6,500.

d.

Decrease net income by $2,000.

e.

Increase net income by $3,000.

39. Management is considering dropping product line A. If it is discontinued, $18,000 of its fixed costs are DTFC. The discontinuation of product line A would:

a. Increase net income by $2,600

b.	Decrease net income by $20,000.
c.	Increase net income by $6,500.
d.	Decrease net income by $2,000.
e.	Increase net income by $3,000.

40. Management is considering dropping product line A. If it is discontinued, (1) $18,000 of its fixed costs are DTFC and (2) the sales of Product C would increase by 10%. The discontinuation of product line A would:

a. Increase net income by $2,600

b.	Decrease net income by $20,000.
c.	Increase net income by $6,500.
d.	Decrease net income by $2,000.
e.	Increase net income by $3,000.

41. Management is considering dropping product line A. If it is discontinued, (1) $18,000 of its fixed costs are DTFC and (2) the selling price of Product B would increase by 10%. The discontinuation of product line A would:

a. Increase net income by $2,600

b.	Decrease net income by $20,000.
c.	Increase net income by $6,500.
d.	Decrease net income by $2,000.
e.	Increase net income by $3,000.