Macaulay Roller Skates Company Has Three Product Lines-D,E,and F

question 139

Multiple Choice

Macaulay Roller Skates Company has three product lines-D,E,and F.The following information is available:
- The company is thinking of dropping product line F because it is reporting an operating loss.Assume that $25,000 of total fixed costs could be eliminated by dropping F.What effect would this decision have on operating income?

• A)Operating income will increase by $25,000.
• B)Operating income will increase by $5,000.
• C)Operating income will decrease by $25,000.
• D)Operating income will decrease by $5,000.

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Definitions:

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