A company has three product lines, one of which reflects the following results:

Question

A company has three product lines, one of which reflects the following results:

If this product line is eliminated, 60% of the fixed expenses can be eliminated and the other 40% will be allocated to other product lines. If management decides to eliminate this product line, the company's net income will

increase by $100,000.

decrease by $180,000.

decrease by $12,000.

increase by $12,000.

Sales $430,000 Variable expenses 250,000 Contribution margin 180,000 Fixed expenses 280,000 Net loss $ (100,000)

Explanation / Answer

decrease by $12,000.

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