Crane Company produces three versions of baseball bats: wood, aluminum, and hard rubber. A condensed segmented income statement for a recent period follows: Wood Aluminum Hard Rubber TotalSales$400000 $100000 $65000 $565000Variable expenses275000 40000 58000 373000Contribution margin125000 60000 7000 192000Fixed expenses75000 35000 22000 132000Net income (loss)$50000 $ 25000 $(15000) $60000Assume all of the fixed expenses for the hard rubber line are avoidable. What will be total net income if the line is dropped?$155000$53000$75000$40000

If all of the fixed expenses traced to Hard Rubber can be avoided, the net income would increase by…

Answered: Crane Company produces three versions…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Crane Company produces three versions of baseball bats: wood, aluminum, and hard rubber. A condensed segmented income statement for a recent period follows:

	Wood	Aluminum	Hard Rubber	Total
Sales	$400000	$100000	$65000	$565000
Variable expenses	275000	40000	58000	373000
Contribution margin	125000	60000	7000	192000
Fixed expenses	75000	35000	22000	132000
Net income (loss)	$50000	$ 25000	$(15000)	$60000

Assume all of the fixed expenses for the hard rubber line are avoidable. What will be total net income if the line is dropped?

$155000

$53000

$75000

$40000

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