Question: Percy Productions has three models: D, E, and F. The following information is available: ? Model D Model E Model F Sales revenue $65,000 $37,000
Percy Productions has three models: D, E, and F. The following information is available:
| ? | Model D | Model E | Model F |
| Sales revenue | $65,000 | $37,000 | $24,000 |
| Variable expenses | $35,000 | $15,000 | $14,000 |
| Contribution margin | $30,000 | $22,000 | $10,000 |
| Fixed expenses | $16,000 | $16,000 | $16,000 |
| Operating income (loss) | $14,000 | $6000 | -$6000 |
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?
| Decrease $24,000 | ||
| Increase $24,000 | ||
| Increase $11,000 | ||
| Decrease $11,000 |
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