H.TotalSales$300,000$210.000$340,000$850,000Costs:Variable costs$180,000$180,000$220,000 $590,000Fixed costs50.00050,00040,000140,000Total costs$230.000$230.000$260,000$730,000Income (loss)$ 70.000$(20,000)$ 80,000$120,000Management is considering the discontinuance of the manufacture and sale of Product G 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 Products Fand H. What isthe amount of change in net income for the current year that will result from the discontinuance of Product G?O $30.000 increase$20.000 increaseO$20.000 decrcase530.000 dccrcase

Solution: Change in net income = Avoidable fixed cost - contribution margin lost on Product G = 0 -…

Answered: $300.000 $210.000 $340.000 $850.000 ts…

$300.000 $210.000 $340.000 $850.000 ts $180.000 $180.000 $220.000 $590,000 50.000 50000 40.000 140.000 $230.000 $230.000 $260.000 S730.000 5 70.000 $(20.000) $ 80.000 $120.000

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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Concept explainers

Capital Gain

Any capital asset when sold can give the seller a higher or lower price from its purchase price leading to a capital gain or capital loss. The time period of holding an asset is decided based on if it is a long term or short-term capital gain. On that basis, the rate of taxation is decided if it is 20%, 15% or according to the tax brackets. The rate of taxation differs in the case of equity or debt, whether long or short term. The capital gain can be adjusted from capital loss to arrive at a net capital gain. The amount of gains and the exemption has to be reported in the tax return filed in the financial year in which the asset was transferred. The tax return can be filed quarterly, monthly, semi-annually or annually.

Question

H.
Total
Sales
$300,000
$210.000
$340,000
$850,000
Costs:
Variable costs
$180,000
$180,000
$220,000 $590,000
Fixed costs
50.000
50,000
40,000
140,000
Total costs
$230.000
$230.000
$260,000
$730,000
Income (loss)
$ 70.000
$(20,000)
$ 80,000
$120,000
Management is considering the discontinuance of the manufacture and sale of Product G 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 Products Fand H. What is
the amount of change in net income for the current year that will result from the discontinuance of Product G?
O $30.000 increase
$20.000 increase
O$20.000 decrcase
530.000 dccrcase

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