ABC Company plans to discontinue a product line. The product line currently generates sales revenue of...

Transcribed Image Text:

ABC Company plans to discontinue a product line. The product line currently generates sales revenue of $100,000 and total contribution margin of $50,000 annually. The fixed costs associated with the product line is $80,000, of which $20,000 cannot be eliminated. Whether the ABC Company should discontinue the product line? Should not discontinue, because discontinue would decrease the operating income by $60,000 Should not discontinue, because discontinue would decrease the operating income by $20,000 O Discontinue, because discontinue would increase the operating income by $30,000 Discontinue, because discontinue would increase the operating income by $10,000 ABC Company plans to discontinue a product line. The product line currently generates sales revenue of $100,000 and total contribution margin of $50,000 annually. The fixed costs associated with the product line is $80,000, of which $20,000 cannot be eliminated. Whether the ABC Company should discontinue the product line? Should not discontinue, because discontinue would decrease the operating income by $60,000 Should not discontinue, because discontinue would decrease the operating income by $20,000 O Discontinue, because discontinue would increase the operating income by $30,000 Discontinue, because discontinue would increase the operating income by $10,000

Answer rating: 100% (QA)

Discontinue bec... View the full answer