Corn Crunchers Has Three Product Lines

question 34

Multiple Choice

Corn Crunchers has three product lines.Its only unprofitable line is Corn Nuts, the results of which appear below for 2012: If this product line is eliminated, 30% of the fixed expenses can be eliminated.How much are the relevant costs in the decision to eliminate this product line?

• A)$54,000
• B)$410,000
• C)$335,000
• D)$284,000

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Definitions:

Equity Method

An accounting technique used by a company to record its investment in another company when it has significant influence but not full control over that company.

Net Income

The total profit of a company after all expenses, including taxes and costs, have been deducted from total revenue.

Equity Method

The equity method is an accounting technique used to assess the investments in other companies, where the investment is recorded at original cost and adjusted according to the investor’s share of the investee's profit or loss.