A company has three product lines, one of which reflects the following results:SalesVariable expensesContribution marginFixed expensesNet lossO decrease by $4000.O increase by $4000decrease by $82000$18100099000O increase by $4800082000130000If this product line is eliminated, 60% of the fixed expenses can be eliminated and the other 40% willbe allocated to other product lines. If management decides to eliminate this product line, thecompany's net income will$ (48000)

Variable cost means the cost which vary with the level of output where as fixed cost remain fixed…

Answered: A company has three product lines, one…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Central Industries has three product lines: A, B, and C. The information given below is available. Central Industries is thinking about dropping Product C because it is reporting a loss. Assume Central Industries drops Product C ?and does not replace it. What will happen to operating income Sales Variable costs Contribution margin. Avoidable fixed costs Unavoidable fixed costs Operating income(loss) Product A $100,000 76.000 24,000 9,000 6.000 $9.000 Product B S90,000 48,000 42,000 18,000 9.000 $15.000 Product C $44,000 35,000 9,000 3,000 7.700 S(1.700) increase by $600 increase by S1,700 () decrease by S6,000 decrease by S9,000 ) increase by S2,400 ()
A company has five product lines, one of which has Fixed expenses of $173,657 and a Net loss of $40,203. If this product line is eliminated, 48% of the fixed expenses can be eliminated and the remainder will be allocated to other product lines. If management decides to eliminate this product line, the amount the company's net income will increase or decrease(-) is? Round to the nearest dollar and put a negative sign - before a decrease. Do not type the dollar sign.
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