Kule,IncProduces Three Different Lines of Car Racks for Transporting Large,bulky

Multiple Choice

Kule,Inc.produces three different lines of car racks for transporting large,bulky items.
$\begin{array}{lccc}&\underline{\text { Bicycle }} &\underline{ \text { Luggage }} &\underline{ \text { Skis } }\\\text {Sales}&\$ 140,000 & \$ 100,000 & \$ 160,000 \\\text {Less: cost of goods sold}&110,000 & 110,000 & 140,000 \\\text {Gross margin}&30,000 & (10,000) & 20,000\end{array}$
Total company net annual profit = $40,000
Included in the cost of goods sold is $12,000 of annual rent (a fixed cost) that is distributed equally among the three product lines.As a consultant to Kule,will you recommend that it drop the luggage rack line?

A) No,dropping the line will actually decrease overall net profits.
B) Yes,dropping the line will increase company net profits.
C) No,dropping the line will result in increased fixed costs.
D) Yes,dropping the line will reduce joint costs.
E) Yes,dropping the line will reduce cost of goods sold and increase revenues.