Diversified Machines Has Four Product Lines, One of Which Reflects

Multiple Choice

Diversified Machines has four product lines, one of which reflects the following results: If this product line is eliminated, 40% of the fixed expenses can be eliminated and the other 60% will be allocated to other product lines.If management decides to eliminate this product line, what will happen to the company's net income?

A) It will increase by $20,000.
B) It will decrease by $52,000.
C) It will decrease by $32,000.
D) It will increase by $48,000.