Multiple Choice
Claris Corporation (a multi-product company) produces and sells 7,000 units of Product X each year. Each unit of Product X sells for $12 and has a contribution margin of $4. If Product X is discontinued, $19,000 of the $32,000 in fixed costs charged to Product X could be eliminated. If Product X is discontinued, the company's overall operating income would:
A) decrease by $4,000 per year.
B) increase by $4,000 per year.
C) decrease by $9,000 per year.
D) increase by $9,000 per year.
Correct Answer:
Verified
Correct Answer:
Verified
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