Question
Lusk Company produces and sells 15,500 units of Product X each month. The selling price of Product X is $25 per unit, and variable expenses
Lusk Company produces and sells 15,500 units of Product X each month. The selling price of Product X is $25 per unit, and variable expenses are $19 per unit. A study has been made concerning whether Product X should be discontinued. The study shows that $74,000 of the $105,000 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 $62,000 per month
decrease by $43,000 per month
increase by $43,000 per month
increase by $12,000 per month
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