Question
The condensed income statement for a company for the past year is as follows: Product F G H Total Sales $200,000 $180,000 $320,000 $700,000 Less
The condensed income statement for a company for the past year is as follows:
Product |
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F | G | H | Total | |
Sales | $200,000 | $180,000 | $320,000 | $700,000 |
Less Variable Costs: | 120,000 | 160,000 | 200,000 | 480,000 |
Contribution Margin | $80,000 | $20,000 | $120,000 | $220,000 |
Less Fixed Costs | 25,000 | 30,000 | 40,000 | 95,000 |
Income (loss) from operation | $55,000 | ($10,000) | $80,000 | $125,000 |
Management is onsidering the discontinuance of the manufacture and sale of Product G at the beginning of the current year. The discontinuance would have no effect on the total fixed costs and expenses of the sales of Products F and H. What is the amount of change in the net income for the current year that will result from the discontinuance of Product G? |
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