The managers of Adamson Apple Co. are considering dropping one of their product lines. The product...

 

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The managers of Adamson Apple Co. are considering dropping one of their product lines. The product line typically has the following revenue and costs: Sales $100,000 Variable costs 80,000 Contribution margin 20,000 Fixed costs 25,000 $(5,000) Operating loss If the product line is discontinued, $4,000 of the fixed costs would be avoided. Also, the freed-up capacity would generate $4,000 of additional contribution margin from the expansion of other product lines. If Adamson discontinues the product line, the effect on overall income will be: $12,000 decrease $8,000 decrease $9,000 increase $3,000 increase The managers of Adamson Apple Co. are considering dropping one of their product lines. The product line typically has the following revenue and costs: Sales $100,000 Variable costs 80,000 Contribution margin 20,000 Fixed costs 25,000 $(5,000) Operating loss If the product line is discontinued, $4,000 of the fixed costs would be avoided. Also, the freed-up capacity would generate $4,000 of additional contribution margin from the expansion of other product lines. If Adamson discontinues the product line, the effect on overall income will be: $12,000 decrease $8,000 decrease $9,000 increase $3,000 increase

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Computation of net loss on discontinued of product line Total fixed ... View the full answer