Karlson Roller Skates Has Three Product Lines-D,E,and F The Company Is Deciding Whether to Drop Product Line F

question 97

Multiple Choice

Karlson Roller Skates has three product lines-D,E,and F.The following information is available: $$\begin{array} { | l | l | c | c | } \hline & \mathrm { D } & \mathrm { E } & \mathrm { F } \\\hline \text { Sales revenue } & \$ 90,000 & \$ 60,000 & \$ 30,000 \\\\\hline \text { Variable costs } & \underline { ( 30,000 } & \underline { ( 15,000 } ) & \underline { ( 12,000 } ) \\\\\hline \text { Contribution margin } & \$ 60,000 & \$ 45,000 & \$ 18,000 \\\\\hline \text { Fixed costs } & \underline { ( 20,000 } & \underline { ( 15,000 } ) & \underline { ( 23,000 } ) \\\\\hline \text { Operating income (loss) } & \underline { \$ 40,000} & \underline { \$ 30,000} & \underline { \$ ( 5000 ) } \\\\\hline\end{array}$$ The company is deciding whether to drop product line F because it has an operating loss.Assuming fixed costs are unavoidable,if Karlson drops product line F and rents the space formerly used to produce product F for $20,000 per year,total operating income will be ________.

• A)$12,000
• B)$67,000
• C)$18,000
• D)$23,000

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Definitions:

Japanese Quail

A species of Old World quail from East Asia, commonly used in research due to its rapid life cycle and clear behavioral traits.

Conditioned Response

A learned reaction or behavior in response to a conditioned stimulus.

Red Light

A red light is commonly used in traffic signals to indicate a command to stop, or it can also refer to a wavelength of light perceived as red.

Conditioned Stimulus

A previously neutral stimulus that, after becoming associated with an unconditioned stimulus, evokes a conditioned response.