Question
Please help me solve the following question with steps on how to do it. I already have the answers, I just need someone to explain
Please help me solve the following question with steps on how to do it. I already have the answers, I just need someone to explain in clear steps on how to do this problem.
1) A condensed income statement for Tramco follows: (amounts are in thousands of dollars)
Products | F | G | H | Total |
Sales (total) | $200 | $180 | $320 | $700 |
Unit-level Variable Cost (total) | (120) | (160) | (200) | (480) |
Contribution Margin | 80 | 20 | 120 | 220 |
Facility-Level Fixed Cost | (25) | (30) | (40) | (95) |
Income (Loss) | $ 55 | $(10) | $ 80 | $125 |
Tramcos management is considering whether to discontinue manufacturing product G at the beginning of the next year. Doing so will have no effect on total fixed costs and no effect on the sales or variable costs of products F and H. The change in income that would result from discontinuing product G is?
Ans: $20,000, decrease
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