Diamond Company Has Three Product Lines, A, B, and C

question 24

Multiple Choice

Diamond Company has three product lines, A, B, and C. The following financial information is available:If Product Line C is discontinued and the manufacturing space formerly devoted to this line is rented for $6,000 per year, pre-tax operating income for the company will likely:

• A) Be unchanged—the two effects cancel each other out.
• B) Increase by $3,300.
• C) Increase by $4,500.
• D) Increase by $7,200.
• E) Increase by some other amount.

---

Definitions:

Intoxicated

The state of being under the influence of alcohol or drugs to a degree that significantly impairs one's physical and cognitive functions.

Repudiates

The action of refusing to accept, acknowledge, or be associated with; in contract law, it refers to the refusal to fulfill contractual obligations.

Sober

A state of being free from the influence of alcohol or drugs, characterized by clear thinking and the absence of intoxication.

Agency Agreement

A contract in which one party (the agent) agrees to act on behalf of another party (the principal) in business transactions.