The condensed income statement for a business for the past year is as follows: Product T U
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Question:
The condensed income statement for a business for the past year is as follows:
Product | ||
T | U | |
Sales | $600,000 | $320,000 |
Less variable costs | 540,000 | 220,000 |
Contribution margin | $ 60,000 | $100,000 |
Less fixed costs | 145,000 | 40,000 |
Income (loss) from operations | $ (85,000) | $ 60,000 |
Management is considering the discontinuance of the manufacture and sale of Product T at the beginning of the current year. The discontinuance would have no effect on the total fixed costs and expenses or on the sales of Product U.
What is the amount of change in net income for the current year that will result from the discontinuance of Product T?
Related Book For
Management Accounting
ISBN: 978-0132570848
6th Canadian edition
Authors: Charles T. Horngren, Gary L. Sundem, William O. Stratton, Phillip Beaulieu
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