Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Bingham Company manufactures and sells a product Product J. Results for last year for the manufacture and sale of Product are as follows: $1,600,000 Sales:

image text in transcribed
image text in transcribed
image text in transcribed
Bingham Company manufactures and sells a product Product J. Results for last year for the manufacture and sale of Product are as follows: $1,600,000 Sales: 10,000 units at $160 each Less costs: Variable production costs Sales commissions: 15% of sales Salaries of line supervisors Traceable fixed advertising expense Fixed general factory overhead (allocated to products on the basis of square feet occupied) Total costs Net loss 960,000 240,000 195,000 180,000 1170,000 1.745.000 $ (1145.000) Bingham Company anticipates no change in the operating result for Product in the foreseeable future if the product is produced. Bingham is reexamining all of its products and is trying to decide whether to discontinue the manufacture and sale of Product J. The company's total fixed factory overhead cost would not be affected by this decision Assume that discontinuing the manufacture and sale of Product will not affect the sale of other products. If the company discontinues Product the change in annual net income due to this decision will be a: $25,000 decrease. $145,000 increase. $170.000 decrease. $315.000 decrease. Assume that discontinuing Product I would result in a $30,000 increase in the contribution margin of other product lines. If Bingham chooses to discontinue Product J, then the change in net income next year due to this action will be a: $145,000 increase. $145.000 decrease. $5,000 increase. $120,000 increase

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial Accounting

Authors: Jill Collis

1st Edition

1137335882, 978-1137335883

More Books

Students also viewed these Accounting questions

Question

Understand the use of different performance-rating techniques

Answered: 1 week ago