San Bernardino Industries Has Three Product Lines, A, B, and C.The

question 90

Multiple Choice

San Bernardino Industries has three product lines, A, B, and C.The following information is available: $\begin{array}{lrrr}&A&B&C\\\text { Sales } & \$ 100,000 & \$ 90,000 & \$ 88,000 \\\text { Variable costs } & \underline{76,000} & \$ 8,000 & {79,000} \\\text { Contribution margin } & \$ 24,000 & \$ 42,000 & \$ 9,000\\\text { Fixed costs: } & & & \\\text { Avoidable } & 9,000 & 18,000 &3,000\\\text { Unavoidable } & \underline{6,000} & 9,000&9,400 \\\text { Operating income } & \$ 9,000 & \$ 15,000&\$3,400) \end{array}$ Assuming product line C is discontinued and the space formerly used to produce product C is rented for $15,000 per year, operating income will increase _____.

• A)$6,600
• B)$9,000
• C)$15,000
• D)$14,400

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