Question
Tremaine Inc. has three product lines: A, B, and C. A B C Total Sales $50,000 $85,000 $90,000 $225,000 Variable costs 30,000 30,000 44,000 104,000
Tremaine Inc. has three product lines: A, B, and C.
|
| A |
| B |
| C |
| Total |
| Sales | $50,000 |
| $85,000 |
| $90,000 |
| $225,000 |
| Variable costs | 30,000 |
| 30,000 |
| 44,000 |
| 104,000 |
| Contribution margin | 20,000 |
| 55,000 |
| 46,000 |
| 121,000 |
| Fixed costs | 23,000 |
| 25,000 |
| 18,000 |
| 66,000 |
| Net income | $ (3,000) |
| $30,000 |
| $28,000 |
| $ 55,000 |
|
|
|
|
|
|
|
|
|
38. Management is considering dropping product line A. If it is discontinued, its fixed costs are all common fixed costs. The discontinuation of product line A would:
a. Increase net income by $2,600
| b. | Decrease net income by $20,000. | ||||||||||||||||||||||||
| c. | Increase net income by $6,500. | ||||||||||||||||||||||||
| d. | Decrease net income by $2,000. | ||||||||||||||||||||||||
| e. | Increase net income by $3,000.
39. Management is considering dropping product line A. If it is discontinued, $18,000 of its fixed costs are DTFC. The discontinuation of product line A would: a. Increase net income by $2,600
40. Management is considering dropping product line A. If it is discontinued, (1) $18,000 of its fixed costs are DTFC and (2) the sales of Product C would increase by 10%. The discontinuation of product line A would: a. Increase net income by $2,600
41. Management is considering dropping product line A. If it is discontinued, (1) $18,000 of its fixed costs are DTFC and (2) the selling price of Product B would increase by 10%. The discontinuation of product line A would: a. Increase net income by $2,600
|
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started