The managers of Adamson Apple Co. are considering dropping one of their product lines. The product line typically has the following revenue and costs: $\begin{array}{lr}
\text { Sales } & \$ 100,000 \
\text { Variable costs } & \underline{80,000} \
\text { Contribution margin } & 20,000 \
\text { Fixed costs } & 25,000 \
\text { Operating loss }&\$(5,000)
\end{array}$ If the product line is discontinued, $4,000 of the fixed costs would be avoided. Also, the freed-up capacity would generate $4,000 of additional contribution margin from the expansion of other product lines. If Adamson discontinues the product line, the effect on overall income will be:
A) $12,000 decrease
B) $8,000 decrease
C) $9,000 increase
D) $3,000 increase

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The Answer of The managers of Adamson Apple Co. are considering dropping one of their product lines. The product line typically has the following revenue and costs: $\begin{array}{lr}
\text { Sales } & \$ 100,000 \
\text { Variable costs } & \underline{80,000} \
\text { Contribution margin } & 20,000 \
\text { Fixed costs } & 25,000 \
\text { Operating loss }&\$(5,000)
\end{array}$ If the product line is discontinued, $4,000 of the fixed costs would be avoided. Also, the freed-up capacity would generate $4,000 of additional contribution margin from the expansion of other product lines. If Adamson discontinues the product line, the effect on overall income will be:
A) $12,000 decrease
B) $8,000 decrease
C) $9,000 increase
D) $3,000 increase

The Managers of Adamson Apple Co If the Product Line Is Discontinued, $4,000 of the Fixed