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

question 65

Multiple Choice

Shine Bright Company has three product lines-D, E, and F. The following information is available: 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.