Business, 19.03.2021 18:10 GgRed

Diamond Company has three product lines, A, B, and C. The following financial information is available: Item Product Line A Product Line B Product Line C
Sales $70,000 $145,000 $32,000
Variable costs $42,000 $77,000 $20,000
Contribution margin $28,000 $68,000 $12,000
Fixed costs:
Avoidable $6,300 $19,000 $8,950
Unavoidable $5,000 $14,500 $4,000
Pre-tax operating
income $16,700 $34,500 $(-950 )

Assuming that Product Line C is discontinued and the manufacturing space formerly devoted to this line is rented for $6,000 per year, operating income for the company will likely:

a. Increase by $7,200.
b. Increase by $3,300.
c. Increase by some other amount.

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Diamond Company has three product lines, A, B, and C. The following financial information is availab...

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