The following summarized data are shown in the projected income statement of Rachel Inc. for two of its product lines P and Q: Projected Income Statement Name of the product lines P Q Sales 390,000 350,000 Costs: - - Variable costs (250,000) (280,000) Fixed costs (60,000) (90,000) Total costs (310,000) (370,000) Income (loss) 80,000 (20,000) Management is considering shutting down the production and sale of Product Q. The shutdown would have no effect on the total fixed costs and on the sales of Product P. What would be the amount of expected change in profit that would result from the shutting down of Product Q? Group of answer choices Profit would be decreased by $20,000 Profit would be increased by $20,000 Profit would be increased by $70,000 Profit would be decreased by $70,000
The following summarized data are shown in the projected income statement of Rachel Inc. for two of its product lines P and Q: Projected Income Statement Name of the product lines P Q Sales 390,000 350,000 Costs: - - Variable costs (250,000) (280,000) Fixed costs (60,000) (90,000) Total costs (310,000) (370,000) Income (loss) 80,000 (20,000) Management is considering shutting down the production and sale of Product Q. The shutdown would have no effect on the total fixed costs and on the sales of Product P. What would be the amount of expected change in profit that would result from the shutting down of Product Q? Group of answer choices Profit would be decreased by $20,000 Profit would be increased by $20,000 Profit would be increased by $70,000 Profit would be decreased by $70,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
The following summarized data are shown in the
| Name of the product lines | P | Q |
|---|---|---|
| Sales | 390,000 | 350,000 |
| Costs: | - | - |
| Variable costs | (250,000) | (280,000) |
| Fixed costs | (60,000) | (90,000) |
| Total costs | (310,000) | (370,000) |
| Income (loss) | 80,000 | (20,000) |
Management is considering shutting down the production and sale of Product Q. The shutdown would have no effect on the total fixed costs and on the sales of Product P. What would be the amount of expected change in profit that would result from the shutting down of Product Q?
Group of answer choices
Profit would be decreased by $20,000
Profit would be increased by $20,000
Profit would be increased by $70,000
Profit would be decreased by $70,000
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