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Jim Bean Company Has Three Product Lines: D, E, and F

question 50

Multiple Choice

Jim Bean Company has three product lines: D, E, and F. The following information is available: D E F
Sales revenue $ 80,000 $42,000 $20,000
Variable expenses $ 40,000 $21,000 $12,000
Contribution margin $ 40,000 $21,000 $ 8,000
Fixed expenses $ 12,000 $15,000 $17,000
Operating income (loss) $ 28,000 $46,000 $(9,000)
Jim Bean Company is thinking of discontinuing product line F because it is reporting an operating loss. All fixed costs are unavoidable. Assuming Jim Bean Company discontinues line F and is able to double the production and sales of product line E without increasing fixed costs. What affect will this have on operating income?

Appreciate the role of time-based activity-based costing in managing and measuring capacity and its impact on cost management.

Understand the concept and components of Activity-Based Costing (ABC).

Identify and classify different types of activities such as unit-level, batch-level, product-level, and organization-sustaining activities.

Comprehend the process of calculating activity rates in an ABC system.

Definitions:

Good Job

A term of praise or acknowledgment used to express approval of someone's performance or effort in a task or responsibility.

Outcome

The result or effect of an action, situation, or decision.

Expectancy

The belief or anticipation about the likelihood that a specific outcome will occur, often influencing motivation and behavior.

Not Unreasonable Level

A phrase indicating that something is within a sensible or acceptable range or standard, often used to discuss expectations or outcomes.