he condensed income statement for a business for the past year is as follows: Product A Z Sales $660,000 $320,000 Less variable costs 540,000 220,000 Contribution margin $ 120,000 $100,000 Less fixed costs 145,000 40,000 Income (loss) from operations $ (25,000) $ 60,000 Management is considering the discontinuance of the manufacture and sale of Product A 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 Product Z. What is the amount of change in net income for the current year that will result from the discontinuance of Product A (amount and increase or decrease)
he condensed income statement for a business for the past year is as follows: Product A Z Sales $660,000 $320,000 Less variable costs 540,000 220,000 Contribution margin $ 120,000 $100,000 Less fixed costs 145,000 40,000 Income (loss) from operations $ (25,000) $ 60,000 Management is considering the discontinuance of the manufacture and sale of Product A 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 Product Z. What is the amount of change in net income for the current year that will result from the discontinuance of Product A (amount and increase or decrease)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
The condensed income statement for a business for the past year is as follows:
|
|
Product |
|
|
|
A |
Z |
|
Sales |
$660,000 |
$320,000 |
|
Less variable costs |
540,000 |
220,000 |
|
Contribution margin |
$ 120,000 |
$100,000 |
|
Less fixed costs |
145,000 |
40,000 |
|
Income (loss) from operations |
$ (25,000) |
$ 60,000 |
Management is considering the discontinuance of the manufacture and sale of Product A 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 Product Z. What is the amount of change in net income for the current year that will result from the discontinuance of Product A (amount and increase or decrease)?
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education