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?

• A)Decrease $13,000
• B)Increase $13,000
• C)Increase $30,000
• D)Increase $34,000

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Definitions:

Single Occurrence

An event or circumstance that happens only once, not part of a series or repeated pattern.

Persist

Refers to continuing steadily or firmly in a course of action in spite of difficulty or opposition.

Subconscious

The part of the mind that is not currently in focal awareness but influences feelings and behaviors.

Genogram

A graphical representation of a family tree that presents detailed information about relationships and patterns across generations.