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

---

Definitions:

High Aspiration

The strong desire or ambition to achieve something, often requiring significant effort or aiming at a high level of accomplishment.

Big Three Traits

A model in personality psychology that describes personality through three broad dimensions: extraversion, neuroticism, and agreeableness.

Auke Tellegen

A psychologist known for his work in personality psychology, particularly for the development of the Multidimensional Personality Questionnaire.

In-group Loyalty

The tendency for individuals to give priority to the welfare of their own group over others, often leading to strong support and defense of the group's members and values.