Question
Lusk Company produces and sells 15,000 units of Product A each month. The selling price of Product A is $20 per unit, and variable expenses
Lusk Company produces and sells 15,000 units of Product A each month. The selling price of Product A is $20 per unit, and variable expenses are $14 per unit. A study has been conducted concerning whether Product A should be discontinued. The study shows that $70,000 of the $100,000 in fixed expenses charged to Product A would continue even if the product were discontinued. These data indicate that if Product A were discontinued, the company's overall monthly operating income would change by how much? a) An increase of $ 10,000. b) An increase of $20,000 . c) A decrease of $20,000 . d ) A decrease of $60,000 .
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