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

question 205

Multiple Choice

Jim Bean Company has three product lines: D,E,and F.The following information is available:
Jim Bean Company is thinking of discontinuing product line F because it is reporting an operating loss.All fixed costs are unavoidable.Jim Bean Company discontinues product line F and rents the space formerly used to produce product F for $20,000 per year,what affect will this have on operating income?

• A)Increase $29,000
• B)Increase $12,000
• C)Decrease $12,000
• D)Increase $37,000

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Definitions:

Check Amount

The check amount is the sum of money written on a check that the drawer directs the bank to pay the payee.

Postdated Check

A postdated check is a check written with a future date, indicating when it can be deposited or cashed.

Insufficient Funds

A situation where an account does not have enough money to cover a transaction, resulting in rejection or fees.

Dishonored Check

A check that a bank refuses to honor or pay because the account holder does not have sufficient funds.