Lusk Corporation produces and sells 14,800 units of Product X each month. The selling price of Product
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Question:
Lusk Corporation produces and sells 14,800 units of Product X each month. The selling price of Product X is $30 per unit, and variable expenses are $24 per unit. A study has been made concerning whether Product X should be discontinued. The study shows that $74,000 of the $112,000 in fixed expenses charged to Product X would not be avoidable even if the product was discontinued. If Product X is discontinued, the company’s overall net operating income would:
decrease by $50,800 per month
increase by $23,200 per month
increase by $61,200 per month
decrease by $61,200 per month
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