1. Shine Bright Company has three product lines-D, E, and F. The following information is available: D
F
Sales
Variable costs
Contribution margin
Fixed expenses
Operating income (loss)
$60,000
36.000
24,000
12.000
$12.000
$38.000
18.000
20.000
15.000
$5.000
$26.000
12.000
14,000
16.000
$(2.000)
Shine Bright Company is thinking of dropping product line F because it is reporting an operating loss.
Assuming fixed costs are unavoidable, if Shine Bright Company drops product line F and does not
replace it, what effect will this have on operating income? Should they drop Product F? **Show your
work to support your answer.