Abel Company Produces Three Versions of Baseball Bats: Wood, Aluminum

question 117

Multiple Choice

Abel Company produces three versions of baseball bats: wood, aluminum, and hard rubber. A condensed segmented income statement for a recent period follows: $\begin{array}{lrrrr}&\text { Wood } & \text { Aluminum } &\text { Hard Rubber }& \text { Total }\\\hline\text { Sales } & \$ 500,000 & \$ 200,000 & \$ 65,000 & \$ 765,000 \\\text { Variable expenses } & 325,000 & 140,000 & 58,000 & 523,000 \\\text { Contribution margin } & 175,000 & 60,000 & 7,000 & 242,000 \\\text { Fixed expenses } & 75,000 & 35,000 & 22,000 & 132,000 \\\text { Net income (loss) }&\$100,000&\$25,000&\$15,000&\$110,000\end{array}$ Assume none of the fixed expenses for the hard rubber line are avoidable. What will be total net income if the line is dropped?

• A)$125,000
• B)$103,000
• C)$105,000
• D)$140,000

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