Percy Productions has three models: D, E, and F. The following information is available: Percy Productions is thinking of discontinuing model F because it is reporting an operating loss. All fixed costs are unavoidable. Assuming Percy Productions discontinues line F and is able to double the production and sales of model E without increasing fixed costs. What effect will this have on operating income?
A)Increase $12,000
B)Decrease $12,000
C)Increase $33,000
D)Decrease $33,000

Question

Percy Productions has three models: D, E, and F. The following information is available:  Percy Productions is thinking of discontinuing model F because it is reporting an operating loss. All fixed costs are unavoidable. Assuming Percy Productions discontinues line F and is able to double the production and sales of model E without increasing fixed costs. What effect will this have on operating income?
A)Increase $12,000 
B)Decrease $12,000 
C)Increase $33,000 
D)Decrease $33,000

Quizplus · Accepted Answer

The Answer of Percy Productions has three models: D, E, and F. The following information is available:  Percy Productions is thinking of discontinuing model F because it is reporting an operating loss. All fixed costs are unavoidable. Assuming Percy Productions discontinues line F and is able to double the production and sales of model E without increasing fixed costs. What effect will this have on operating income?
A)Increase $12,000 
B)Decrease $12,000 
C)Increase $33,000 
D)Decrease $33,000

Percy Productions Has Three Models: D, E, and F