Darren Company Has Three Product Lines: D,E,and F the Following

question 58

Multiple Choice

Darren Company has three product lines: D,E,and F The following information is
available:
$\begin{array} { | l | c c | c |} \hline & \text { D } & \text { E } & \text { F } \\\hline \text { Sales revenue } & \$ 70,000 & \$ 40,000 & \$ 28,000 \\\hline \text { Variable expenses } & \$ 40,000 & \$ 21,000 & \$ 12,000 \\\hline \text { Contribution margin } & \$ 30,000 & \$ 19,000 & \$ 16,000 \\\hline \text { Fixed expenses } & \$ 12,000 & \$ 15,000 & \$ 17,000 \\\hline \text { Operating income (loss) } & \$ 18,000 & \$ 4,000 & \$ ( 1,000 ) \\\hline\end{array}$
Darren Company is thinking of dropping product line F because it is reporting an operating loss.
- All fixed costs are unavoidable.Assuming Darren Company drops 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 $20,000
• B)Increase $20,000
• C)Decrease $3,000
• D)Increase $3,000

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Definitions:

Closed-Anchor Brake Shoe

A brake shoe configuration where the ends are fixed in place, enhancing braking stability and force.

Anchor Pin

A pin used to secure or anchor components together, often found in brake assemblies to hold brake shoes in place.

S-cam Brake Systems

A type of drum brake system commonly used in heavy vehicles, where the rotation of an S-shaped camshaft forces brake shoes outward to create friction.

Air Disc Brakes

A type of brake system used in vehicles, particularly heavy-duty trucks and buses, that uses air pressure to push pads onto a disc to create friction and stop the vehicle.