aughn Machines has four product lines, one of which reflects the following results: Sales $220000 Variable costs 117000 Contribution margin 103000 Fixed costs 117000 Net loss $(14000)
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
| Sales | $220000 |
| Variable costs | 117000 |
| Contribution margin | 103000 |
| Fixed costs | 117000 |
| Net loss | $(14000) |
If this product line is eliminated, 45% of the fixed costs can be eliminated and the other 55% will be allocated to other product lines. If management decides to eliminate this product line, what will happen to the company's net income?
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