tid-8433 m#3(Ch 10, 11, & 12) Lusk Corporation produces and sells 16,000 units o

Question

tid-8433 m#3(Ch 10, 11, & 12) Lusk Corporation produces and sells 16,000 units of Product X each month. The selling price of Product X is $30 per unit, and per unit. A study has been conc expenses charged to Product X would not be avoidable advantage (disadvantage) for the company of eliminating this product should be: Help Save & Exit Sub made concerning whether Product X should be discontinued. The study shows that $70,000 of the $110,000 in monthly fixed even if the product was discontinued. If Product X is discontinued, the annual financial Multiple Choice $54,000 $54,000) $14.000

Explanation / Answer

Profit on continue product X :

Effect on discontinue operation

so answer is c) ($56000)

Sales ( 30*16000) 480000 Less: Variable cost (24*16000) (384000) Less: Fixed cost (110000) Loss if product continue (14000)

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