Molly IncIs Considering Eliminating One of Its Product Lines

question 33

Multiple Choice

Molly Inc.is considering eliminating one of its product lines.The fixed costs currently allocated to the product line will be allocated to other product lines upon discontinuance.What financial effects occur if the product line is discontinued?

• A)The company's total fixed costs will increase
• B)Total fixed costs will decrease by the amount of the product line's fixed costs
• C)Net profit will decrease by the amount of the contribution margin of the product line being discontinued
• D)Net profit will decrease by the amount of the product line's fixed costs

---

Definitions:

Surfactant

Lipoproteins forming a monomolecular layer over pulmonary alveolar surfaces; stabilizes alveolar volume by reducing surface tension and the tendency for the alveoli to collapse.

Premature Infant

A premature infant, or preterm infant, is a baby born before 37 weeks of gestation, often requiring specialized care due to underdeveloped organs and systems.

Oxygen Transport

The process by which oxygen is carried through blood or other body fluids to tissues and organs.

Arterial and Venous Blood

Arterial blood is oxygen-rich and travels away from the heart; venous blood is oxygen-depleted and returns to the heart.