The following information pertains to Dodge Company's three products:
- Assume that product C is discontinued and the extra space is rented for $300 per month.All other information remains the same as the original data.Annual profits will
A) increase by $75.
B) decrease by $75.
C) increase by $525.
D) remain the same.

Question

The following information pertains to Dodge Company's three products: 
- Assume that product C is discontinued and the extra space is rented for $300 per month.All other information remains the same as the original data.Annual profits will
A) increase by $75. 
B) decrease by $75. 
C) increase by $525. 
D) remain the same.

Quizplus · Accepted Answer

The extra space rented for $300 per month will generate additional income of $300 x 12 = $3600 annually. If product C was causing a loss of $3075 annually, discontinuing it and renting the space will result in an increase in annual profits by $3600 - $3075 = $525.

The Following Information Pertains to Dodge Company's Three Products