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Bonita Machines has four product lines, one of which reflects the following results: Sales $217000 Variable expenses 116000 Contribution margin 101000 Fixed expenses 116000 Net
Bonita Machines has four product lines, one of which reflects the following results:
Sales | $217000 |
Variable expenses | 116000 |
Contribution margin | 101000 |
Fixed expenses | 116000 |
Net loss | $(15000) |
If this product line is eliminated, 45% of the fixed expenses can be eliminated and the other 55% will be allocated to other product lines. If management decides to eliminate this product line, what will happen to the company's net income?
It will increase by $15000.
It will decrease by $48800.
It will decrease by $33800.
It will increase by $52200.
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