The condensed income statement for a Fletcher Inc. for the past year is as follows: Product F
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Question:
The condensed income statement for a Fletcher Inc. for the past year is as follows:
Product | ||||
F | G | H | Total | |
Sales | $300,000 | $210,000 | $340,000 | $850,000 |
Costs: | ||||
Variable costs | $180,000 | $180,000 | $220,000 | $590,000 |
Fixed costs | 50,000 | 50,000 | 40,000 | 140,000 |
Total costs | $230,000 | $230,000 | $260,000 | $730,000 |
Income (loss) | $ 70,000 | $(20,000) | $ 80,000 | $120,000 |
Management is considering the discontinuance of the manufacture and sale of Product G at the beginning of the current year. The discontinuance would have no effect on the total fixed costs and expenses or on the sales of Products F and H. What is the amount of change in net income for the current year that will result from the discontinuance of Product G?
a.$20,000 decrease
b.$20,000 increase
c.$30,000 increase
d.$30,000 decrease
Related Book For
Accounting
ISBN: 978-0324188004
21st Edition
Authors: Carl s. warren, James m. reeve, Philip e. fess
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