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The Managers of Adamson Apple Ltd

Question 37

Multiple Choice

The managers of Adamson Apple Ltd. are considering dropping one of their product lines. The product line typically has the following revenue and costs: The managers of Adamson Apple Ltd. are considering dropping one of their product lines. The product line typically has the following revenue and costs: If the product line is discontinued, $4,000 of the fixed costs would be avoided. Also, the freed-up capacity would generate $4,000 of additional contribution margin from the expansion of other product lines. If Adamson discontinues the product line, the effect on overall profit will be A) $12,000 decrease B) $8,000 decrease C) $9,000 increase D) $3,000 increase If the product line is discontinued, $4,000 of the fixed costs would be avoided. Also, the freed-up capacity would generate $4,000 of additional contribution margin from the expansion of other product lines. If Adamson discontinues the product line, the effect on overall profit will be


A) $12,000 decrease
B) $8,000 decrease
C) $9,000 increase
D) $3,000 increase

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