Question
Rings Company has three product lines, A, B, and C. The following financial information is available: Item Product Line A Product Line B Product Line
Rings Company has three product lines, A, B, and C. The following financial information is available:
| Item | Product Line A | Product Line B | Product Line C |
|---|---|---|---|
| Sales | $ 64,000 | $ 130,000 | $ 29,000 |
| Variable costs | $ 38,400 | $ 69,000 | $ 18,125 |
| Contribution margin | $ 25,600 | $ 61,000 | $ 10,875 |
| Fixed costs: | |||
| Avoidable | $ 6,000 | $ 17,500 | $ 8,100 |
| Unavoidable | $ 4,700 | $ 13,000 | $ 3,700 |
| Pre-tax operating income | $ 14,900 | $ 30,500 | $ (925) |
If Product Line C is discontinued and the manufacturing space formerly devoted to this line is rented for $6,000 per year, pre-tax operating income for the company will likely:
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Accounting Principles
Authors: Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso, Weygandt Kimmel Kieso
10th Edition
0470646462, 978-0470646465
