Mission Company Has Three Product Lines: D, E, and F

Multiple Choice

Mission Company has three product lines: D, E, and F. The following information is available: Mission Company is thinking of discontinuing product line F because it is reporting an operating loss. All fixed costs are unavoidable. Assume Mission Company is able to increase the sales revenue of product F to $32,000 with no change in volume of units sold and no change in variable costs or fixed costs. What affect will this have on operating income?

A) Increase $40,000
B) Increase $12,000
C) Decrease $12,000
D) Decrease $20,000