DM Corporation Has Provided You with the Following Budgeted Income

question 159

Multiple Choice

DM Corporation has provided you with the following budgeted income statement for one of their products: DM has just encountered environmental problems with the product and will be forced to drop the product line altogether.They will be able to eliminate 75% of the fixed expenses.What will be the impact on operating income of the company?

• A)Operating income will decrease by $195,000.
• B)Operating income will decrease by $45,000.
• C)Operating income will increase by $240,000.
• D)Operating income will increase by $55,000.

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