Question: Please help me solve the following question with steps on how to do it. I already have the answers, I just need someone to explain
Please help me solve the following question with steps on how to do it. I already have the answers, I just need someone to explain in clear steps on how to do this problem.
1) A condensed income statement for Tramco follows: (amounts are in thousands of dollars)
| Products | F | G | H | Total |
| Sales (total) | $200 | $180 | $320 | $700 |
| Unit-level Variable Cost (total) | (120) | (160) | (200) | (480) |
| Contribution Margin | 80 | 20 | 120 | 220 |
| Facility-Level Fixed Cost | (25) | (30) | (40) | (95) |
| Income (Loss) | $ 55 | $(10) | $ 80 | $125 |
Tramcos management is considering whether to discontinue manufacturing product G at the beginning of the next year. Doing so will have no effect on total fixed costs and no effect on the sales or variable costs of products F and H. The change in income that would result from discontinuing product G is?
Ans: $20,000, decrease
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
