Flag question: Question 29Question 292.5 pts

The condensed income statement for a business for the past year is as follows:

Product T Product U

Sales .................................................. $600,000 $320,000

Less: Variable Costs ......................... <540,000> <220,000>

Contribution Margin ....................... $ 60,000 $100,000

Less fixed costs ................................. <145,000> < 40,000>

Income (loss) from operations ....... $ (85,000) $ 60,000

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 effect on the total fixed costs 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?

Group of answer choices

$25,000 increase

$100,000 increase

$85,000 decrease

$60,000 decrease

None of the above

Flag question: Question 30Question 302.5 pts

A business is operating at 70% of capacity and is currently purchasing a part used in its manufacturing operations for $24 per unit. The unit cost for the business to make the part is $36, including fixed costs, and $28, not including fixed costs. If 15,000 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?

Group of answer choices

$180,000 cost increase

$120,000 cost increase

$60,000 cost increase

$180,000 cost decrease

None of the above