Reference no: EM13608910

Balser Company manufactures and sells a product called Northmoon. Results of last year for the manufacture and sale of Northmoons are as follows: Sales (4,000 Northmoons at $120 each) $ 480,000 Less costs: Variable production costs 232,000 Sales commissions (15% of sales) 72,000 Salary of product line manager 50,000 Fixed product line advertising 80,000 Plant depreciation 66,000 Total costs 500,000 Net operating loss $ (20,000) Balser anticipates no change in the operating results for the product Northmoon in the foreseeable future. Balser is reexamining all of its product lines and is trying to decide whether or not to discontinue the manufacture and sale of Northmoons. Total Plant Depreciation costs would not be affected by a decision to drop any one product line. Assume advertising is billed and charged for each advertising campaign as they occur. Also, assume there are no other open positions available for the supervisor. 37. Assume that discontinuing the manufacture and sale of Northmoon will have no effect on other product lines. If the company discontinues the Northmoon product line, the change in annual operating income due to this decision will be a: A) $20,000 increase. B) $66,000 decrease. C) $46,000 decrease. D) $86,000 decrease.