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Based on the segment income statement below, Gourmet Sorbet is considering eliminating its Mango Tango line. Revenue from Mango Tango sales $500,000 Salaries for Mango

Based on the segment income statement below, Gourmet Sorbet is considering eliminating its Mango Tango line.

Revenue from Mango Tango sales

$500,000

Salaries for Mango Tango workers

(120,000)

Direct material costs for Mango Tango

(300,000)

Sunk costs (equipment depreciation)

(75,000)

Allocated company-wide facility-sustaining costs

(50,000)

Net loss

$ (45,000)

1. The total relevant costs in this decision add up to

a. $400,000.

b. $475,000.

c. $525,000.

d. $420,000.

2. If Mango Tango were eliminated, profitability would

a. increase $25,000.

b. increase $525,000.

c. decrease $80,000.

d. decrease $100,000.

Please show the necessary calculations, thanks!

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