Shine Bright Company Has Three Product Lines-D, E, and F

question 83

Multiple Choice

Shine Bright Company has three product lines-D, E, and F. The following information is available:
$$\begin{array} { | l | r | r | r | } \hline & \text { D } & \text { E } & { \text { F } } \\\hline \text { Sales } & \$ 60,000 & \$ 38,000 & \$ 26,000 \\\hline \text { Variable costs } & 36,000 & 18,000 & 12,000 \\\hline \text { Contribution margin } & 24,000 & 20,000 & 14,000 \\\hline \text { Fixed experses } & 12,000 & 15,000 & 16,000 \\\hline \text { Operating income (loss) } & \$ 12,000 & \$ 5,000 & \$ ( 2,000 ) \\\hline\end{array}$$
-
Shine Bright Company is thinking of dropping product line F because it is reporting an operating loss. Assuming fixed costs are unavoidable, if Shine Bright Company drops product line F and rents the space formerly used to produce product F for $17,000 per year, what effect will this have on operating income?

• A) Operating income will increase $3,000.
• B) Operating income will increase $15,000.
• C) Operating income will decrease $14,000.
• D) Operating income will decrease $3,000.

---

Definitions:

Stereotyping

The act of categorizing individuals into specific groups based on preconceived notions or characteristics, often leading to biased judgments and actions.

Prejudice

A preconceived opinion or judgment towards people or things, often based on stereotypes rather than actual experience or knowledge.

Discrimination

Unfair or prejudicial treatment of different categories of people or things, especially on the grounds of race, age, or sex.

Self-Fulfilling Prophecy

A prediction that directly or indirectly causes itself to become true, due to the feedback between belief and behavior.