Kule,Inc.produces three different lines of car racks for transporting large,bulky items. Included in the cost of goods sold is $12,000 of annual rent (a fixed cost)that is distributed equally among the three product lines.As a consultant to Kule,will you recommend that they drop the luggage rack line?
A) No,dropping the line will actually decrease overall net profits.
B) Yes,dropping the line will increase company net profits.
C) No,dropping the line will result in increased fixed costs.
D) Yes,dropping the line will reduce joint costs.
E) Yes,dropping the line will reduce cost of goods sold and increase revenues.

Question

Kule,Inc.produces three different lines of car racks for transporting large,bulky items.  Included in the cost of goods sold is $12,000 of annual rent (a fixed cost)that is distributed equally among the three product lines.As a consultant to Kule,will you recommend that they drop the luggage rack line?
A) No,dropping the line will actually decrease overall net profits. 
B) Yes,dropping the line will increase company net profits. 
C) No,dropping the line will result in increased fixed costs. 
D) Yes,dropping the line will reduce joint costs. 
E) Yes,dropping the line will reduce cost of goods sold and increase revenues.

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 $12,000 of annual rent (a fixed cost)that is distributed equally among the three product lines.As a consultant to Kule,will you recommend that they drop the luggage rack line?
A) No,dropping the line will actually decrease overall net profits. 
B) Yes,dropping the line will increase company net profits. 
C) No,dropping the line will result in increased fixed costs. 
D) Yes,dropping the line will reduce joint costs. 
E) Yes,dropping the line will reduce cost of goods sold and increase revenues.

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