A company has three product lines, one of which reflects the following results:
ID: 2373847 • Letter: A
Question
A company has three product lines, one of which reflects the following results:
If this product line is eliminated, 60% of the fixed expenses can be eliminated and the other 40% will be allocated to other product lines. If management decides to eliminate this product line, the company's net income will
increase by $100,000.
decrease by $180,000.
decrease by $12,000.
increase by $12,000.
Sales $430,000 Variable expenses 250,000 Contribution margin 180,000 Fixed expenses 280,000 Net loss $ (100,000)Explanation / Answer
decrease by $12,000.