Carlton Products Has Three Product Lines: A,B,and C Management Is Considering Dropping Product Line B

question 28

Multiple Choice

Carlton Products has three product lines: A,B,and C.
$\begin{array}{lr}&\underline{\text { A }} &\underline{\text { B }} &\underline{ \text { C }} &\underline{ \text { Total }}\\ \text { Sales } &\$50000&\$550200&\$700000&\$1750000\\ \text { Variable costs } &\underline{280000}&\underline{420000}&\underline{300000}&\underline{1000000}\\ \text {Contribution margin } &220000&130000&400000&750000\\ \text { Fixed costs} &\underline{100000}&\underline{140000}&\underline{150000}&\underline{390000}\\ \text { Net income} &\underline{\$120000}&\underline{\$10000}&\underline{\$(250000) }&\underline{\$360000}\\ \text { } &\\\end{array}$




Management is considering dropping product line B.If it is discontinued,all of its fixed costs can be avoided.The discontinuation of product line B would:

• A) decrease net income $10 000.
• B) increase net income $140 000.
• C) decrease net income $130 000.
• D) increase net income $10 000.

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Definitions:

Alimentary Canal

The entire digestive tract from the mouth to the anus, through which food is ingested, broken down, and absorbed.

Pancreas

A glandular organ that functions in both the digestive and endocrine systems, producing digestive enzymes and hormones like insulin.

Digestive Enzymes

Enzymes produced by the digestive system that break down proteins, fats, and carbohydrates into simpler molecules that can be absorbed and utilized by the body.

Esophagus

A muscular tube that conveys food and liquids from the mouth to the stomach using rhythmic contractions known as peristalsis.