Diamond Company Has Three Product Lines, A, B, and C

Multiple Choice

Diamond Company has three product lines, A, B, and C. The following financial information is available:Diamond is thinking of dropping Product Line C because it is reporting an operating loss. Assuming the company drops Product Line C and does not replace it, pre-tax operating income for the firm will likely:

A) Be unchanged
B) Increase by $1,200
C) Increase by $1,500
D) Decrease by $1,500
E) Decrease by $2,700