The condensed income statement for a business for the past year is presented as follows: Product F G H Total Sales $200,000 $180,000 $320,000 $700,000 Less Variable Cost Contribution Margin Less Fixed Cost 120,000 160,000 200,000 480,000 $80,000 $20,000 $120,000 $220,000 25,000 30,000 40,000 95,000 Income (Loss) From Operation $55,000 ($10,000) $80,000 $125,000 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 F and H. What is the amount of change of in net income for the current year that will result from the discontinuance of Product G? a. $10,000 decrease b. $20,000 increase c. $10,000 increase d. $20,000 decrease e. none of the listed responses is the correct answer
The condensed income statement for a business for the past year is presented as follows: Product F G H Total Sales $200,000 $180,000 $320,000 $700,000 Less Variable Cost Contribution Margin Less Fixed Cost 120,000 160,000 200,000 480,000 $80,000 $20,000 $120,000 $220,000 25,000 30,000 40,000 95,000 Income (Loss) From Operation $55,000 ($10,000) $80,000 $125,000 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 F and H. What is the amount of change of in net income for the current year that will result from the discontinuance of Product G? a. $10,000 decrease b. $20,000 increase c. $10,000 increase d. $20,000 decrease e. none of the listed responses is the correct answer
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:The condensed income statement for a business for the past year is presented as follows:
Product
F
G
H
Total
Sales
$200,000 $180,000 $320,000 $700,000
Less Variable Cost
Contribution Margin
Less Fixed Cost
120,000 160,000 200,000 480,000
$80,000 $20,000 $120,000 $220,000
25,000 30,000 40,000 95,000
Income (Loss) From Operation $55,000 ($10,000) $80,000 $125,000
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 F and H.
What is the amount of change of in net income for the current year that will result from
the discontinuance of Product G?
a. $10,000 decrease
b. $20,000 increase
c. $10,000 increase
d. $20,000 decrease
e. none of the listed responses is the correct answer
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