The managers of Adamson Apple Co. are considering dropping one of their product lines. The product line typically has the following revenue and costs: Sales $100,000
Variable costs 80,000
Contribution margin 20,000
Fixed costs 25,000
Operating loss $ (5,000)
If the product line is discontinued, $4,000 of the fixed costs would be avoided. Also, the freed-up capacity would generate $4,000 of additional contribution margin from the expansion of other product lines. If Adamson discontinues the product line, the effect on overall income will be:
A)$12,000 decrease
B)$8,000 decrease
C)$9,000 increase
D)$3,000 increase

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The Answer of The managers of Adamson Apple Co. are considering dropping one of their product lines. The product line typically has the following revenue and costs: Sales $100,000
Variable costs 80,000
Contribution margin 20,000
Fixed costs 25,000
Operating loss $ (5,000)
If the product line is discontinued, $4,000 of the fixed costs would be avoided. Also, the freed-up capacity would generate $4,000 of additional contribution margin from the expansion of other product lines. If Adamson discontinues the product line, the effect on overall income will be:
A)$12,000 decrease
B)$8,000 decrease
C)$9,000 increase
D)$3,000 increase

The Managers of Adamson Apple Co