Question
The Ted Company is considering eliminating the following product line: Product AXP Sales $50,000 Less variable costs: Raw materials 30,000 Direct labor 9,000 Contribution margin
The Ted Company is considering eliminating the following product line:
| Product AXP | |
| Sales | $50,000 |
| Less variable costs: | |
| Raw materials | 30,000 |
| Direct labor | 9,000 |
| Contribution margin | $11,000 |
| Less fixed costs: | |
| Production costs allocated to products | 17,000 |
| Profit (loss) | $(6,000) |
What amount of cost is avoidable if Ted outsources production of this product?
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Management Accounting
Authors: Charles T. Horngren, Gary L. Sundem, William O. Stratton, Phillip Beaulieu
6th Canadian edition
013257084X, 1846589207, 978-0132570848
