The condensed income statement for a PiggyPink Ltd. for the past year is as follows: Product A B C Total Sales $350,000 $210,000 $340,000 $900,000 Costs: Variable costs -$160,000 -$160,000 - $200,000 -$520,000 Fixed costs -45,000 -55,000 -35,000 -135,000 Total costs $205,000 $215,000 $235,000 $655,000 Income (loss) $145,000 $ (5,000) $105,000 $245,000 Management is considering the discontinuance of the manufacture and sale of Product B at the beginning of the current year. The discontinuance would have no effect on the total fixed costs and expenses or on the sales of Products A and C. What is the amount of change in net income for the current year that will result from the discontinuance of Product B? Select one: a. $30,000 increase. b. $30,000 increase. c. $50,000 decrease. d. $55,000 decrease. e. $5,000 increase.
The condensed income statement for a PiggyPink Ltd. for the past year is as follows: Product A B C Total Sales $350,000 $210,000 $340,000 $900,000 Costs: Variable costs -$160,000 -$160,000 - $200,000 -$520,000 Fixed costs -45,000 -55,000 -35,000 -135,000 Total costs $205,000 $215,000 $235,000 $655,000 Income (loss) $145,000 $ (5,000) $105,000 $245,000 Management is considering the discontinuance of the manufacture and sale of Product B at the beginning of the current year. The discontinuance would have no effect on the total fixed costs and expenses or on the sales of Products A and C. What is the amount of change in net income for the current year that will result from the discontinuance of Product B? Select one: a. $30,000 increase. b. $30,000 increase. c. $50,000 decrease. d. $55,000 decrease. e. $5,000 increase.
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter7: Variable Costing For Management
analysis
Section: Chapter Questions
Problem 9E: The following data were adapted from a recent income statement of Caterpillar Inc. (CAT) for the...
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Question
The condensed income statement for a PiggyPink Ltd. for the past year is as follows:
|
|
Product |
|
||
|
|
A |
B |
C |
Total |
|
Sales |
$350,000 |
$210,000 |
$340,000 |
$900,000 |
|
Costs: |
|
|
|
|
|
Variable costs |
-$160,000 |
-$160,000 |
- $200,000 |
-$520,000 |
|
Fixed costs |
-45,000 |
-55,000 |
-35,000 |
-135,000 |
|
Total costs |
$205,000 |
$215,000 |
$235,000 |
$655,000 |
|
Income (loss) |
$145,000 |
$ (5,000) |
$105,000 |
$245,000 |
Management is considering the discontinuance of the manufacture and sale of Product B at the beginning of the current year. The discontinuance would have no effect on the total fixed costs and expenses or on the sales of Products A and C. What is the amount of change in net income for the current year that will result from the discontinuance of Product B?
Select one:
a.
$30,000 increase.
b.
$30,000 increase.
c.
$50,000 decrease.
d.
$55,000 decrease.
e.
$5,000 increase.
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