Mission Company Has Three Product Lines: D, E, and F

question 65

Multiple Choice

Mission Company has three product lines: D, E, and F. The following information is available: Mission Company is thinking of discontinuing product line F because it is reporting an operating loss. All fixed costs are unavoidable. Assuming Mission Company discontinues line F and is able to double the production and sales of product line E without increasing fixed costs. What affect will this have on operating income?

• A)Decrease $15,000
• B)Increase $15,000
• C)Increase $46,000
• D)Increase $40,000

---

Definitions:

Efficiency

The optimal use of resources to achieve the desired ends with minimal waste or expense; often relates to economic efficiency where resources are allocated in a way that maximizes the net benefit to society.

Tax System

The structured method and principles a government uses to collect taxes from individuals and businesses, which can vary in complexity and types of taxes imposed.

Efficiency

Efficiency in economics refers to the optimal allocation and use of resources to maximize output without wasting any resources.

Wealthiest Citizens

Individuals possessing the highest net worth or wealth within a society, often determined by assets, investments, and income.