Kule,IncProduces Three Different Lines of Car Racks for Transporting Large,bulky

Kule,Inc.produces three different lines of car racks for transporting large,bulky items.

Total company net annual profit = $40,000 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 it drop the luggage rack line?

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

Correct Answer:

Verified

Unlock this answer now
Get Access to more Verified Answers free of charge

Access For Free