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What is the effect on operating income of discontinuing

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Reference no: EM132612530

Question - Firm A has three product lines with the following revenues and expenses:

A B C

Sales revenue $ 80,000 $42,000 $60,000

Variable expenses $ 65,000 $21,000 $12,000

Contribution margin $ 15,000 $21,000 $48,000

Fixed expenses $ 19,000 $15,000 $17,000

Operating income (loss) ($4,000) $6,000 $31,000

All fixed expenses are unavoidable. What is the effect on operating income of discontinuing product line A?

a. Decrease $15,000

b. Increase $19,000

c. Increase $15,000

d. Increase $4,000

Reference no: EM132612530

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