The Tangier Company Is Considering Eliminating the Following Product Line

question 98

Multiple Choice

The Tangier Company is considering eliminating the following product line: $$\begin{array} { | l | l r | } \hline & { \text { Product AXP } } \\\hline \text { Sales } & \$ 80,000 \\\hline \text { Less variable costs: } & & \\\hline \text { Raw materials } & 50,000 \\\hline \text { Direct labor } & 10,000 \\\hline \text { Contribution margin } & \$ 20,000 \\\hline \text { Less fixed costs: } & \\\hline \text { Production costs allocated to products } & 30,000 \\\hline \text { Profit (Loss) } & \$ ( 10,000 ) \\\hline\end{array}$$ What amount of cost is avoidable if Tangier outsources production of this product?

• A) $60,000
• B) $50,000
• C) $90,000
• D) $20,000

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