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

question 67

Multiple Choice

Shine Bright Company has three product lines-D,E,and F.The following information is available:
$$\begin{array} { | l | r | r | r | } \hline & { \text { D } } & { \text { E } } & { \text { F } } \\\hline \text { Sales } & \$ 60000 & \$ 38000 & \$ 26000 \\\hline \text { Variable costs } & 36000 & 18000 & 12000 \\\hline \text { Contribution margin } & 24000 & 20000 & 14000 \\\hline \text { Fixed expenses } & 12000 & 15000 & 16000 \\\hline \text { Profit (loss) } & \$ 12000 & \$ 5000 & \$ ( 2000 ) \\\hline\end{array}$$
Shine Bright Company is thinking of dropping product line F because it is reporting an operating loss.Assuming fixed costs are unavoidable,if Shine Bright Company drops product line F and does not replace it,what effect will this have on profit?

• A) profit will increase $14 000
• B) profit will decrease $14 000
• C) profit will increase $16 000
• D) profit will increase $2 000

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Definitions:

Confidence Interval

A span of numerical values, derived from data collected from samples, that is assumed to capture the value of an unknown population quality.

Proportion of Employee

A ratio or fraction that represents the number of employees in a particular category relative to the total number of employees.

Commute by Car

The act of traveling between one's home and workplace or school by automobile.

Confidence Interval

A range of values, derived from statistical analysis, that is likely to contain the true value of an unknown parameter with a certain level of confidence.