Question
Lusk Company produces and sells 14,700 units of Product X each month. The selling price of Product X is $29 per unit, and variable expenses
Lusk Company produces and sells 14,700 units of Product X each month. The selling price of Product X is $29 per unit, and variable expenses are $23 per unit. A study has been made concerning whether Product X should be discontinued. The study shows that $73,000 of the $102,000 in fixed expenses charged to Product X would continue even if the product was discontinued. These data indicate that if Product X is discontinued, the company's overall net operating income would:
decrease by $59,200 per month
increase by $13,800 per month
increase by $42,800 per month
decrease by $42,800 per month
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