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

question 71

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. Assume Jim Bean Company is able to increase the sale price of product F to $32,000 with no change in volume of units sold and no change in variable costs or fixed costs. What affect will this have on operating income?

• A)Increase $37,000
• B)Increase $12,000
• C)Decrease $12,000
• D)Decrease $20,000

---

Definitions:

Information System

A set of interrelated components that collect, process, store, and distribute information to support decision making, coordination, and control in organizations.

Embedded Programs

Software written to control machines or devices that are not typically considered computers, integrated into hardware systems for specific functions.

Programming Languages

Formal languages comprising a set of instructions that produce various kinds of output, used in computer programming to implement algorithms.

Storage Space

The total amount of data that can be saved in a given storage medium or system, such as a hard drive or cloud storage.