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

question 164

Multiple Choice

Shine Bright Company has three product lines: D, E, and F. The following information is available:
$$\begin{array} { | l | r | r | r | } \hline & \text { D } & \text { E } & { \text { F } } \\\hline \text { Sales } & \$ 60,000 & \$ 38,000 & \$ 26,000 \\\hline \text { Variable costs } & 36,000 & 18,000 & 12,000 \\\hline \text { Contribution margin } & 24,000 & 20,000 & 14,000 \\\hline \text { Fixed experses } & 12,000 & 15,000 & 16,000 \\\hline \text { Operating income (loss) } & \$ 12,000 & \$ 5,000 & \$ ( 2,000 ) \\\hline\end{array}$$
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Shine Bright Company is thinking of dropping product line F because it is reporting an operating loss. Assume that $8,000 of total fixed costs could be eliminated by dropping F. What effect would this decision have on operating income?

• A) Operating income will increase $3,000.
• B) Operating income will increase $15,000.
• C) Operating income will decrease $6,000.
• D) Operating income will decrease $3,000.

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Definitions:

Supportive Leadership

A leadership style focused on providing emotional support, encouragement, and fostering a positive work environment for team members.

Directive Leadership

A leadership style where the leader offers clear expectations and guidance on what needs to be done, how to do it, and when it should be completed.

Group Norms

Shared guidelines or rules for behavior that most group members follow, dictating what is considered normal or acceptable within the group.

Cohesiveness

The quality of forming a united whole, often referring to the sense of solidarity or loyalty among members of a group.