A Company Has Three Product Lines One of Which Reflects

question 90

Multiple Choice

A company has three product lines one of which reflects the following results: $$\begin{array} { l r } \text { Sales } & \$ 215,000 \\\text { Variable expenses } & 125,000 \\\text { Contribution margin } & 90,000 \\\text { Fixed expenses } & 130,000 \\\text { Net loss } & \$ ( 40,000 ) \end{array}$$ If this product line is eliminated 60% of the fixed expenses can be eliminated and the other 40% will be allocated to other product lines.If management decides to eliminate this product line the company's net income will

• A)increase by $40000.
• B)decrease by $90000.
• C)decrease by $12000.
• D)increase by $12000.

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Definitions:

Interest

The cost of borrowing money or the payment received for deposit funds, calculated as a percentage of the principal.

Investment

The allocation of money into financial assets, real estate, or other ventures with the expectation of obtaining additional income or profit.

Interest Earned

The amount of money gained on an investment or savings account over time due to applied interest rates.

Interest Rate

The percentage at which interest is paid by borrowers for the use of money that they borrow from a lender.