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.
$$\begin{array}{l}\begin{array} { | l | c | c | c |} \hline & \text { Bicycle } & \text { Luggage } & \text { Sks } \\\hline \text { Sales } & \$ 140,000 & \$ 100,000 & \$ 160,000 \\\hline \text { Less: cost of goods sold } & 110,000 & 110,000 & 140,000 \\\hline \text { Net proff } & 30,000 & ( 10,000 ) & 20,000 \\\hline & & & \\\hline & & & \\\hline\end{array}\\\text { Total company net annual profit } = \$ 40,000\end{array}$$ Included in the cost of goods sold is $120,000 of annual rent (a fixed cost) that is distributed equally among the three product lines.
-Refer to Kule,Inc.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 the company drop the luggage rack line?

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