ach unit of Product X sells for $8 and has a contribution margin of $5. If Product X is discontinued, $18,000 of fixed overhead would be eliminated. What is the impact of discontinuing Product X on the company's overall operating income?

FINANCIAL ACCOUNTING
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ISBN:9781259964947
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Chapter1: Financial Statements And Business Decisions
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Your Company produces 5,000 units of Product X each year. Each unit of Product X sells for $8 and has a contribution margin of $5. If Product X is discontinued, $18,000 of fixed overhead would be eliminated. What is the impact of discontinuing Product X on the company's overall operating income?
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The company produces 5000 units of Product X which contributes $ 5 per unit of contribution . If the product is discontinued , it will be able to avoid $ 18,000 of fixed overheads. The company has to calculate the net advantage or disadvantage

 

 

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