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