Question
Richmond Company is considering eliminating one of its products, product A, which costs $60,000 a year to produce but only provides $55,000 in revenues. Careful
Richmond Company is considering eliminating one of its products, product A, which costs $60,000 a year to produce but only provides $55,000 in revenues. Careful analysis shows that two-thirds of the cost could be eliminated by dropping product A. What would be the effect on net income of eliminating product A?
| A. | $15,000 decrease | |
| B. | $15,000 increase | |
| C. | $ 5,000 increase | |
| D. | $ 5,000 decrease |
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Managerial Accounting
Authors: Carl Warren
14th Edition
1337516147, 978-1337270595
