Mission Company has three product lines: D, E, and F. The following information is available: Mission Company is thinking of discontinuing product line F because it is reporting an operating loss. All fixed costs are unavoidable. Mission Company discontinues product line F and rents the space formerly used to produce product F for $18,000 per year, what affect will this have on operating income?
A)Increase $27,000
B)Increase $10,000
C)Decrease $10,000
D)Increase $33,000

Question

Mission Company has three product lines: D, E, and F. The following information is available:  Mission Company is thinking of discontinuing product line F because it is reporting an operating loss. All fixed costs are unavoidable. Mission Company discontinues product line F and rents the space formerly used to produce product F for $18,000 per year, what affect will this have on operating income?
A)Increase $27,000 
B)Increase $10,000 
C)Decrease $10,000 
D)Increase $33,000

Quizplus · Accepted Answer

The Answer of Mission Company has three product lines: D, E, and F. The following information is available:  Mission Company is thinking of discontinuing product line F because it is reporting an operating loss. All fixed costs are unavoidable. Mission Company discontinues product line F and rents the space formerly used to produce product F for $18,000 per year, what affect will this have on operating income?
A)Increase $27,000 
B)Increase $10,000 
C)Decrease $10,000 
D)Increase $33,000

Mission Company Has Three Product Lines: D, E, and F