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. Assuming Mission Company discontinues line F and is able to double the production and sales of product line E without increasing fixed costs. What affect will this have on operating income?
A)Decrease $15,000
B)Increase $15,000
C)Increase $46,000
D)Increase $40,000

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. Assuming Mission Company discontinues line F and is able to double the production and sales of product line E without increasing fixed costs. What affect will this have on operating income?
A)Decrease $15,000 
B)Increase $15,000 
C)Increase $46,000 
D)Increase $40,000

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. Assuming Mission Company discontinues line F and is able to double the production and sales of product line E without increasing fixed costs. What affect will this have on operating income?
A)Decrease $15,000 
B)Increase $15,000 
C)Increase $46,000 
D)Increase $40,000

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