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Smith Ltd has three product lines: A, B, and C. Sales Variable costs Contribution Margin Fixed costs Net income A $10,000 A) Decrease by 2,000 B) Increase by 4,000 C) Increase by 2,000 D) Increase by 6,000 E) Decrease by 4,000 4,500 5,500 3.500 2,000 col B 9,000 7.000 2,000 6.000 (4,000) C 12,000 6.000 6,000 3.000 3,000 Total 31,000 17,500 13,500 12,500 1,000 Product line B appears unprofitable, and management is considering discontinuing the line. How would the discontinuation of Product line B affect net income?

Smith Ltd has three product lines: A, B, and C. Sales Variable costs Contribution Margin Fixed costs Net income A $10,000 A) Decrease by 2,000 B) Increase by 4,000 C) Increase by 2,000 D) Increase by 6,000 E) Decrease by 4,000 4,500 5,500 3.500 2,000 col B 9,000 7.000 2,000 6.000 (4,000) C 12,000 6.000 6,000 3.000 3,000 Total 31,000 17,500 13,500 12,500 1,000 Product line B appears unprofitable, and management is considering discontinuing the line. How would the discontinuation of Product line B affect net income?

Managerial Accounting
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter6: Cost-volume-profit Analysis
Section: Chapter Questions
Problem 2BE: Contribution margin Waite Company sells 250,000 units at 120 per unit. Variable costs are 78 per...
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Smith Ltd has three product lines: A, B, and C. Sales Variable costs Contribution Margin Fixed costs Net income B 9,000 4,500 7.000 5,500 2,000 3.500 6.000 2,000 (4,000) A) Decrease by 2,000 B) Increase by 4,000 C) Increase by 2,000 D) Increase by 6,000 E) Decrease by 4,000 A $10,000 C 12,000 6,000 6,000 3,000 3,000 Total 31,000 17,500 13,500 12.500 1,000 Product line B appears unprofitable, and management is considering discontinuing the line. How would the discontinuation of Product line B affect net income?
Transcribed Image Text:Smith Ltd has three product lines: A, B, and C. Sales Variable costs Contribution Margin Fixed costs Net income B 9,000 4,500 7.000 5,500 2,000 3.500 6.000 2,000 (4,000) A) Decrease by 2,000 B) Increase by 4,000 C) Increase by 2,000 D) Increase by 6,000 E) Decrease by 4,000 A $10,000 C 12,000 6,000 6,000 3,000 3,000 Total 31,000 17,500 13,500 12.500 1,000 Product line B appears unprofitable, and management is considering discontinuing the line. How would the discontinuation of Product line B affect net income?
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