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

question 73

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. Assume that $15,000 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 $1,000.
• C)Operating income will decrease $6,000.
• D)Operating income will decrease $3,000.

---

Definitions:

Substitute Goods

Products or services that can be used interchangeably to satisfy the same consumer need or demand, often influencing each other's demand in the market.

Reasonable Amount

A quantity or level that is considered to be fair, appropriate, or within acceptable limits based on the circumstances.

Without Unreasonable Delay

Acting or responding in a timely manner without excessive postponement.

Good Faith

The honest intent to act without taking an unfair advantage over another party, typically referenced in contracts or negotiations.