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Brown Manufacturing makes single kayaks, double kayaks, and lightweight competitive kayaks.The double kayak line has been showing losses for several years, and management is considering dropping the line.Recent income statements have been very similar to the following information which was prepared for the most recent year: Of the fixed costs, $393,750 is common costs that have been allocated equally to each product line.What will total operating income be if Brown drops the double kayak line?
Fixed Factors
Elements of production that cannot be easily increased or decreased in the short term, such as land, buildings, or capital equipment.
Weak Axiom
A principle or condition in economics that provides a minimal criterion for consumer choice consistency under certain assumptions.
Profit Maximization
A process or strategy in which a firm's primary objective is to achieve the highest possible profits by adjusting its production and pricing techniques.
Input Increases
A situation where there is an enhancement or augmentation in the resources used for production.
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