What affect will this have on operating income

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Reference no: EM132951

Question:

Shine Bright Company has three product lines: D, E & F. The subsequent information is available: D: Sales Revenue: $60,000, variable costs 36,000, contribution margin: 24,000, fixed expenses: 120,000, operating income: $12,000 E: Sales Revenue: $38,000, variable costs 18,000, contribution margin: 20,000, fixed expenses: 15,000, operating income: $5,000 F: Sales Revenue: $26,000, variable costs $12,000, contribution margin: 14,000, fixed expenses: 16,000, operating income (loss): $(2,000) Shine Bright Company is thinking of dropping product line F because it is reporting an operating loss. All fixed costs are unavoidable. Shine Bright Company drops line F and rents the space formerly used to give product F for $17,000 per year, what affect will this have on operating income?

Reference no: EM132951

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