Kule,Inc.produces three different lines of car racks for transporting large,bulky items. Included in the cost of goods sold is $120,000 of annual rent (a fixed cost)that is distributed equally among the three product lines.What will be the effect on total net profit for the company if the line of bicycle racks is dropped?
A) Total net profit will increase by $30,000.
B) Total net profit will increase by $10,000.
C) Total net profit will decrease by $70,000.
D) Total net profit will decrease by $10,000.
E) There is not enough information provided to answer this question.

Question

Kule,Inc.produces three different lines of car racks for transporting large,bulky items.  Included in the cost of goods sold is $120,000 of annual rent (a fixed cost)that is distributed equally among the three product lines.What will be the effect on total net profit for the company if the line of bicycle racks is dropped?
A) Total net profit will increase by $30,000. 
B) Total net profit will increase by $10,000. 
C) Total net profit will decrease by $70,000. 
D) Total net profit will decrease by $10,000. 
E) There is not enough information provided to answer this question.

Quizplus · Accepted Answer

The Answer of Kule,Inc.produces three different lines of car racks for transporting large,bulky items.  Included in the cost of goods sold is $120,000 of annual rent (a fixed cost)that is distributed equally among the three product lines.What will be the effect on total net profit for the company if the line of bicycle racks is dropped?
A) Total net profit will increase by $30,000. 
B) Total net profit will increase by $10,000. 
C) Total net profit will decrease by $70,000. 
D) Total net profit will decrease by $10,000. 
E) There is not enough information provided to answer this question.

Kule,IncProduces Three Different Lines of Car Racks for Transporting Large,bulky