Question: Bubblemania has three product lines: A, B, and C. A B C Total Sales $10,000 $9,000 $12,000 $31,000 Variable costs 4,500 7,000 6,000 17,500 Contribution


Bubblemania has three product lines: A, B, and C. A B C Total Sales $10,000 $9,000 $12,000 $31,000 Variable costs 4,500 7,000 6,000 17,500 Contribution margin 5,500 2,000 6,000 13,500 Fixed costs 3,500 6,000 3,000 12,500 Net Income 2,000 (-4,000) 3,000 1,000 Product B appears to be unprofitable, and management is considering discontinuing the line. If it is discontinued, $1,000 of the line's fixed costs can be avoided. The discontinuation of product B would: a. increase net income by $3,000 b. decrease net income by $3,000 C. increase net income by $1,000 d. decrease net income by $1,000
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
