Reference no: EM132648725

Bubblemania has three product lines - A, B, and C.A B C TotalSales $10,000

                           Variable costs             Contribution Margin               Fixed costs

Net income

                          9,000                          12,000
                           7,000                           6,000
                           2,000                            6,000
                            6,000                           3,000
                           31,000
                             17,500
                            13,500
                          12,500
                             1,000

                               4,500
                               5,500
                                 3,500
                               2,000                                   (4,000)                               3,000

Question 1: Product line B appears unprofitable, and management is considering discontinuing the line. How would the discontinuation of Product line B affect net income?

a. increase by $4,000

b. decrease by $4,000

c. increase by $2,000

d. decrease by $2,000

e. increase by $6,000