Macaulay Company Has Three Product Lines-D, E, and F Macaulay Company Is Thinking of Dropping Product Line F Because

question 128

Multiple Choice

Macaulay Company has three product lines-D, E, and F. The following information is available: $\begin{array}{|l|c|c|c|} \hline& \text { D } & \text { E } & \text { F } \\\hline \text { Sales } & \$ 70,000 & \$ 40,000 & \$ 30,000 \\\hline \text { Variable costs } & (40,000) & (20,000) & (10,000) \\\hline \text { Contribution margin } & 30,000 & 20,000 & 20,000 \\\hline \text { Fixed expenses } & (15,000) & (15,000) & (25,000) \\\hline \text { Operating income (loss) } & \$ 15,000 & \$ 5,000 & (\$ 5,000) \\\hline\end{array}$ Macaulay Company is thinking of dropping product line F because it is reporting an operating loss.
- Assuming fixed costs are unavoidable, if Macaulay Company drops product line F and does not replace it, what effect will this have on operating income?

• A) Operating income will increase $5,000.
• B) Operating income will increase $20,000.
• C) Operating income will increase $25,000.
• D) Operating income will decrease $20,000.

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Definitions:

High Gothic

A phase of Gothic architecture between the 13th and 14th centuries, characterized by taller structures, pointed arches, and light-filled interiors, exemplified by cathedrals like Chartres and Reims.

Early Gothic

An architectural style that began in the 12th century in France, characterized by pointed arches, ribbed vaults, and flying buttresses.

Laon's Nave Elevation

Refers to the design and structure of the central nave's vertical sections in the Laon Cathedral, a prime example of early Gothic architecture in France.

Gallery of the King

A specific section or room within a museum, palace, or larger institution dedicated to showcasing works of art or historical objects associated with royalty.