CORRECT ANSWER C. THE PRODUCTION AND SALE OF THE NEW DOLLS WOUL...

256.

Correct answer c. The production and sale of the new dolls would decrease the company’s

profit by $39,200 as shown below.

Contribution

$400,000

[10,000 x ($100 - $60)]

Fixed costs

456,000

Operating income

-56,000

Tax savings @30%

16,800

Net loss

-$39,000