Question
The condensed income statement for a Fletcher Inc. for the past year is as follows: Product F G H Total Sales $300,000 $210,000 $340,000 $850,000
The condensed income statement for a Fletcher Inc. for the past year is as follows:
| Product | |||
| F | G | H | Total |
Sales | $300,000 | $210,000 | $340,000 | $850,000 |
Costs: |
|
|
|
|
Variable costs | $180,000 | $180,000 | $220,000 | $590,000 |
Fixed costs | 50,000 | 50,000 | 40,000 | 140,000 |
Total costs | $230,000 | $230,000 | $260,000 | $730,000 |
Income (loss) | $ 70,000 | $ (20,000) | $ 80,000 | $120,000 |
Management is considering 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 or on the sales of Products F and H. What is the amount of change in net income for the current year that will result from the discontinuance of Product G?
$20,000 increase |
$30,000 increase |
$20,000 decrease |
$30,000 decrease |
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