Question
Lusk Corporation produces and sells 14,600 units of Product X each month. The selling price of Product X is $28 per unit, and variable
Lusk Corporation produces and sells 14,600 units of Product X each month. The selling price of Product X is $28 per unit, and variable expenses are $22 per unit. A study has been made concerning whether Product X should be discontinued. The study shows that $74,000 of the $101,000 in monthly fixed expenses charged to Product X would not be avoidable even if the product was discontinued. If Product X is discontinued, the monthly financial advantage (disadvantage) for the company of eliminating this product should be: (2.5) 1) ($60,600) 2) $13,400 3) ($40,400) 4) $40,400
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