Assume That Discontinuing the Tam Product Would Result in a $120,000

question 35

Multiple Choice

Assume that discontinuing the Tam product would result in a $120,000 increase in the contribution margin of other product lines.How many Tams would have to be sold next year for the company to be as well off as if it just dropped the line and enjoyed the increase in contribution margin from other products?

• A) 5,000 units.
• B) 6,000 units.
• C) 6,500 units.
• D) 7,000 units.Units required = (275,000 + 25,000 + 120,000)/60 = 7,000 units.