Question
The Ashley Company sells three products and prepares the following income statements: Product Lines ---------------------------------------------------- A B C Totals Sales $l00,000 $200,000 $400,000 $700,000 Less:
The Ashley Company sells three products and prepares the following income statements:
Product Lines
----------------------------------------------------
A B C Totals
Sales $l00,000 $200,000 $400,000 $700,000
Less:
Variable Costs 70,000 205,000 205,000 480,000
------------ ----------- ---------- ------------
Contribution Margin 30,000 ( 5,000) 195,000 220,000
Fixed Costs 40,000 10,000 50,000 100,000
----------- ----------- ---------- -----------
Net Income ($ 10,000) ($ 15,000) $145,000 $120,000
======= ======= ======= =======
Assuming no fixed costs will be eliminated by dropping a product line, which (if any) of the product lines should be dropped?
Select one:
a. Drop A onlyb. Drop B onlyc. Do not drop any product lined. Drop A and B
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started