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 that 50% of the fixed costs of a product line would be eliminated if the line was eliminated, which (if any) of the product lines should be dropped
Select one:
a. Do not drop any product lineb. Drop A and Bc. Drop A onlyd. Drop B only
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