Riverside Industries Has Three Product Lines, A, B, and C

question 64

Multiple Choice

Riverside Industries has three product lines, A, B, and C.The following information is available: $\begin{array}{l}&A&B&C\\\text { Sales } & \$ 100,000 & \$ 90,000 & \$ 44,000 \\\text { Variable costs } & \underline{76,000} & \underline{48,000} & \underline{35,000} \\\text { Contribution margin } & \$ 24,000 & \$ 42,000 & \$ 9,000\\\text { Fixed costs: }\\\text { Avoidable } & 9,000 & 18,000 & 3,000 \\\text { Unavoidable } & \underline{6,000} & 9,000 & \underline{7,700} \\\text { Operating income } & \$ 9,000 & \$ 15,000 & \$ 1,700) \end{array}$ Riverside Industries is thinking of dropping product line C because it is reporting a loss.Assuming Riverside drops line C and does not replace it, the operating income will _____.

• A)increase by $2,400
• B)increase by $600
• C)decrease by $6,000
• D)decrease by $9,000

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Definitions:

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The legal term referring to the property, assets, and liabilities left behind by an individual after death.

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