A company is trying to decide whether or not it should discontinue a product segment. The segment has the

following costs and sales:

Sales

$ 170,000

Variable expenses

$ 130,000

Supervisor's salary

$ 10,000

Advertising

$ 10,000

Utilities

$ 30,000

Property taxes

$ 15,000

Depreciation of Equipment

$ 22,000

Other overhead

$ 18,000

No other use can be found for the floor space and equipment being used to produce the product, and the

othe overhead and utilities must still be paid regadless of the firm's decision. The supervisor will be laid off if the segment is discontinued.

Why should the company continue or discontineu the segment?

Discontinue because the profits will be $65,000 higher

Discontinue because the profits will be $10,000 higher

Continue because profits will be $20,000 higher

Continue because profits will be $85,000 higher