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The income statement for a business for the past year is as follows: Product T U Sales $500,000 $750,000 Variable costs 400,000 550,000 Contribution margin
The income statement for a business for the past year is as follows:
Product | ||
T | U | |
Sales | $500,000 | $750,000 |
Variable costs | 400,000 | 550,000 |
Contribution margin | 100,000 | 200,000 |
Fixed costs | 135,000 | 120,000 |
income (loss) from operations | ($35,000) | $80,000 |
Management is considering the discontinuance of the manufacture and sale of Product T. The discontinuance would have no effect on the total fixed costs or on the sales of Product U. What is the amount of change in net income for the current year that will result from the discontinuance of Product T?
Select one:
a. $100,000 increase
b. $100,000 decrease
c. $35,000 decrease
d. $35,000 increase
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