The Condensed Income Statement for a Business for the Past

question 61

Multiple Choice

The condensed income statement for a business for the past year is presented as follows: ? $\begin{array}{lccc}&\text { Product }\\&\mathrm{F}&\mathrm{G}& \mathrm{H}&\text{Total}\\ \text { Sales } & \$ 300,000 & \$ 220,000 & \$ 340,000&\$860,000 \\ \text { Less variable costs } & 180,000 & 190,000 & 220,000&590,000 \\ \text { Contributi on margin } & \$ 120,000 & \$ 30,000 & \$ 120,000 &\$270,000\\ \text { Less fixed costs } & 50,000 & 50,000 & 40,000&140,000 \\\text { Income (loss) from operations } & \$ 70,000 & \$(20,000) & \$ 80,000&\$130,000 \\\end{array}$ ?
Management is considering the discontinuance of the manufacture and sale of Product G 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 Products F and H.What is the amount of change in net income for the current year that will result from the discontinuance of Product G?

• A) $30,000 decrease
• B) $30,000 increase
• C) $20,000 decrease
• D) $20,000 increase

---

Definitions:

Work Centers

Locations within a manufacturing operation where specific tasks are carried out, usually consisting of one or more machines or work areas.

Process-oriented Layout

A way of arranging equipment and workstations in a workspace where similar processes are grouped together, aimed at optimizing efficiency in production or service operations.

Material Flow

The movement, storage, control, and protection of materials, goods, and products throughout the process of manufacturing, warehousing, distribution, consumption, and disposal.

Minimize Distance

The objective to reduce the total length or travel time between points, often in logistics, routing, or layout planning.