Cesar Company has three product lines: A, B and C. The information given below is available. Assume Cesar Company drops Product C. Cesar Company then doubles the production and sales of Product B without ?increasing fixed costs. What will happen to operating income Product C $44,000 35,000 9,000 3,000 7,700 S(1.700) Product A Product B $100,000 76,000 24,000 9,000 6,000 $9.000 $90,000 48,000 42,000 18,000 9,000 $15.000 Sales Variable costs Contribution margin Avoidable fixed costs Unavoidable fixed costs Operating income(loss) increase by $18,000 O increase by $15,000 O increase by $36,000 O increase by $24,000 increase by $42.000 O

Managerial Accounting: The Cornerstone of Business Decision-Making
7th Edition
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Chapter8: Tactical Decision-making And Relevant Analysis
Section: Chapter Questions
Problem 11MCQ: Garrett Company provided the following information: Common fixed cost totaled 46,000. Garrett...
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Cesar Company has three product lines: A, B and C. The information given
below is available. Assume Cesar Company drops Product C. Cesar
Company then doubles the production and sales of Product B without
?increasing fixed costs. What will happen to operating income
Product C
Product A
$100,000
76,000
24,000
9,000
6,000
$9.000
Product B
$90,000
48,000
42,000
18,000
9,000
$15.000
$44,000
35,000
9,000
3,000
7,700
S(1.700)
Sales
Variable costs
Contribution margin
Avoidable fixed costs
Unavoidable fixed costs
Operating income(loss)
increase by $18,000
increase by $15,000
increase by $36,000
increase by $24,000
increase by $42,000 O
O O O O
Transcribed Image Text:Cesar Company has three product lines: A, B and C. The information given below is available. Assume Cesar Company drops Product C. Cesar Company then doubles the production and sales of Product B without ?increasing fixed costs. What will happen to operating income Product C Product A $100,000 76,000 24,000 9,000 6,000 $9.000 Product B $90,000 48,000 42,000 18,000 9,000 $15.000 $44,000 35,000 9,000 3,000 7,700 S(1.700) Sales Variable costs Contribution margin Avoidable fixed costs Unavoidable fixed costs Operating income(loss) increase by $18,000 increase by $15,000 increase by $36,000 increase by $24,000 increase by $42,000 O O O O O
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