Percy Productions Has Three Models: D, E, and F

Multiple Choice

Percy Productions has three models: D, E, and F. The following information is available: Percy Productions is thinking of discontinuing model F because it is reporting an operating loss. All fixed costs are unavoidable. Assume Percy Productions 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 effect will this have on operating income?

A) Increase $11,000
B) Increase $24,000
C) Decrease $11,000
D) Decrease $24,000