Lehigh Roller Skates Has Three Product Lines-D,E,and F

question 105

Multiple Choice

Lehigh Roller Skates 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 $33,000.
• B)Operating income will increase by $18,000.
• C)Operating income will decrease by $3,000.
• D)Operating income will decrease by $15,000.

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