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Label Company produces and sells 15,000 units of Product X1 each month. The selling price of Product X1 is $20 per unit, and variable expenses
Label Company produces and sells 15,000 units of Product X1 each month. The selling price of Product X1 is $20 per unit, and variable expenses are $15 per unit. A study has been made concerning whether Product X1 should be discontinued. The study shows that $80,000 of the $120,000 in fixed expenses charged to Product X1 would remain even if the product was discontinued. These data indicate that if Product X1 is discontinued, the company's overall net operating income would (include in your answer whether it will increase or decrease, and by how much)
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