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Lion Corporation manufactures several types of accessories. For the year, the gloves and mittens line had sales of $502,000, variable expenses of $370,500, and fixed
Lion Corporation manufactures several types of accessories. For the year, the gloves and mittens line had sales of $502,000, variable expenses of $370,500, and fixed expenses of $144,500. Therefore, the gloves and mittens line had a net loss of $13,000. If Lion eliminates the line $35,700 of fixed costs will remain. Prepare an analysis showing whether the company should eliminate the gloves and mittens line. (If an amount reduces the net income then enter with a negative sign preceding the number eg.-15,000 or parenthesis, eg. (15,000).) Eliminate Net Income Increase (Decrease) Continue 502000 Sales 370500 i 370500 Contribution margin > 131500 0 131500 Fixed costs 144500 i 35700 i 108800 Net income/(loss) - 13000 $ 35700 $ -48700 Company eliminate the gloves and mittens line
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