(9).

Tramcos management is considering whether to discontinue manufacturing product G at the beginning of the next year. Doing so will have no effect on total fixed costs and no effect on the sales or variable costs of products F and H. The change in income that would result from discontinuing product G is

a. $10,000 increase

b. $10,000 decrease

c. $20,000 decrease

d. $30,000 increase

--------------------------------------------------

(10). Jason Company is considering replacing equipment that originally cost $600,000. New equipment costs $500,000, and the old equipment can be sold for $400,000. What is the sunk cost in this situation?

a. $600,000

b. $200,000

c. $400,000

d. $500,000

A condensed income statement for Tramco follows: (amounts are in thousands of dollars) Products Sales total $200 S180 $320 S700 Unit-level variable Cost total 120 160 200 480 Contribution Margin 80 20 120 220 125 C40 Facility-Level Fixed Cost