Knowledge Check 01

Knowledge Check 01 A company has three product lines, one of which reflects the following results: Sales $ 215,000 Variable expenses 125,000 Contribution margin 90,000 Fixed expenses 140,000 Net 1055 $ (50,000) If this product line is eliminated, 60% ofthe fixed expenses are traceable fixed expenses, which can be eliminated, and the other 40% are common fixed expenses that cannot be avoided. If management decides to eliminate this product line, the company's net income will 0 increase by $50,000 0 decrease by $90,000 0 decrease by $6,000 0 increase by $6,000