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The segmented income statement for XYZ Company for the year ended December 31, 2016, follows XYZ COMPANY Gegmented Income Statement For the Year Ended December
The segmented income statement for XYZ Company for the year ended December 31, 2016, follows XYZ COMPANY Gegmented Income Statement For the Year Ended December 31, 2016 Total Company Product A Product B Product C S178.000 S298,000 $ 117,000 56,000 Variable expenses Fixed expenses Operating income $ 316,000 $144,000 61,000111000 279,000162,00045,00072,000 $ 39,000 $ 37,000 $(18 16.000 The company is concemed about the performance of product A, and you have been asked to analyze the situation and recommend to the president whether to continue or discontrue the product During your investigation, you discover that certain fixed expenses are traceable directly to each product lire as indicated here Total Company Product A Product BProduct C Direct txed exponses $105,000 $74,000 12000 $19,000 The remaining fixed expenses are considered to be corporate wide expenses that have been alocated to each produc line based on sakes revenue. Required: a. What will be the effect of the decision to discontinue product A on operating income
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