San Bernardino Industries has three product lines, A, B, and C. The following information is available: $$\begin{array} { l l l l }
& \underline { \mathrm { A } } & \underline { \mathrm { B } } & \underline { \mathrm { C } } \
\text { Sales } & \$ 100,000 & \$ 90,000 & \$ 88,000 \
\text { Variable costs } & \underline{76,000} & 48,000 & \underline{79,000} \
\text { Contribution margin} & \$ 24,000 & \$ 42,000 & \$ 9,000\
\text { Fixed costs: } & & & \
\text { Avoidable } & \mathbf { 9 , 0 0 0 } & 18,000 & 3,000 \
\text { Unavoidable } & \underline { 6,000 } & \underline { 9,000 } & \underline {9,400 } \
\text { Operating income } & \underline { \$ 9,000 } & \underline { \$ 15,000 } & \underline {( \$ 3,400) }
\end{array}$$ Assuming product line C is discontinued and the space formerly used to produce product C is rented for $15,000 per year, operating income will:

Question

San Bernardino Industries has three product lines, A, B, and C. The following information is available: $$\begin{array} { l l l l } 
& \underline { \mathrm { A } } & \underline { \mathrm { B } } & \underline { \mathrm { C } } \
\text { Sales } & \$ 100,000 & \$ 90,000 & \$ 88,000 \
\text { Variable costs } & \underline{76,000} & 48,000 & \underline{79,000} \
\text { Contribution margin} & \$ 24,000 & \$ 42,000 & \$ 9,000\
\text { Fixed costs: } & & & \
\text { Avoidable } & \mathbf { 9 , 0 0 0 } & 18,000 & 3,000 \
\text { Unavoidable } & \underline { 6,000 } & \underline { 9,000 } & \underline {9,400 } \
\text { Operating income } & \underline { \$ 9,000 } & \underline { \$ 15,000 } & \underline {( \$ 3,400) }
\end{array}$$ Assuming product line C is discontinued and the space formerly used to produce product C is rented for $15,000 per year, operating income will:

Quizplus · Accepted Answer

The Answer of San Bernardino Industries has three product lines, A, B, and C. The following information is available: $$\begin{array} { l l l l } 
& \underline { \mathrm { A } } & \underline { \mathrm { B } } & \underline { \mathrm { C } } \
\text { Sales } & \$ 100,000 & \$ 90,000 & \$ 88,000 \
\text { Variable costs } & \underline{76,000} & 48,000 & \underline{79,000} \
\text { Contribution margin} & \$ 24,000 & \$ 42,000 & \$ 9,000\
\text { Fixed costs: } & & & \
\text { Avoidable } & \mathbf { 9 , 0 0 0 } & 18,000 & 3,000 \
\text { Unavoidable } & \underline { 6,000 } & \underline { 9,000 } & \underline {9,400 } \
\text { Operating income } & \underline { \$ 9,000 } & \underline { \$ 15,000 } & \underline {( \$ 3,400) }
\end{array}$$ Assuming product line C is discontinued and the space formerly used to produce product C is rented for $15,000 per year, operating income will:

San Bernardino Industries Has Three Product Lines, A, B, and C