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1.The condensed income statement for a business for the past year is presented as follows Product Total $850,000 S260,000 $340,000 300,000 $210,000 180.000 190.000220,000 $120,000

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1.The condensed income statement for a business for the past year is presented as follows Product Total $850,000 S260,000 $340,000 300,000 $210,000 180.000 190.000220,000 $120,000 20,000 Sales Less variable costs Contribution margin Less fixed costs Income (loss) from oper. $120,000 50.002 50,00040,000140,000 S20,000 $(30.000) 80,000 120.000 Management is considering the discontinuance of the manufacture and sale of Product G 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 F and H. What is the amount of change in net income for the current year that will result from the discontinuance of Product G? a. $20,000 increase b. $30,000 increase $20,000 decrease $30,000 decrease d. 2. The condensed income statement for a business for the past year is as follows: Product Sales $660,000 $320,000 540.000220,000 S 120,000 $100,000 145.000 40,000 $(25,000) $ 60,000 Less variable costs Contribution margin Less fixed costs Income (loss) from operations Management is considering the discontinuance of the manufacture and sale of Product T at the beginning of the current year. The discontinuance would have no eff expenses or on the sales of Product U. What is the amount of change in net income for the current year that will result from the discontinuance of Product T? a. $120,000 increase b. $250,000 increase c. $25,000 decrease d. $120,000 decrease 3. A business is operating at 90% of capacity and is currently purchasing a part used in its manufacturing operations for $15 per unit. The unit cost for the business to make the part is $20, including fixed costs, and $12, not including fixed costs. If 30,000 units of the part are normally purchased during the year but could be manufactured using unused capacity, what would be the amount of differential cost increase or decrease from making the part rather than purchasing it? a. $150,000 cost increase b. $ 90,000 cost decrease c. $150,000 cost increase d. $90,000 cost increase

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