Accelerate Rollerblades Has Three Product Lines-D,E,and F

question 20

Multiple Choice

Accelerate Rollerblades has three product lines-D,E,and F.The following information is available:

The company is deciding whether to drop product line F because it has an operating loss.Assume that $15,000 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 $35,000.
• B)Operating income will increase by $20,000.
• C)Operating income will decrease by $5000.
• D)Operating income will decrease by $15,000.

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Definitions:

Common Stockholders

Individuals or entities that own shares of a company's common stock, granting them voting rights and a share of the company's profits through dividends.

Dividend Payment

A dividend payment is a distribution of a portion of a company's earnings to its shareholders, typically made in cash or additional stock.

Journal Entry

The accounting method for expressing the effects of a transaction on accounts in a debits-equal-credits format.