Tyler Corporation Has Provided You with the Following Budgeted Income

question 88

True/False

Tyler Corporation has provided you with the following budgeted income statement for one of their products:
$$\begin{array} { | l | r | } \hline \text { Sales } & \$ 750,000 \\\hline \text { Variable expenses } & \underline { 500,000 } \\\hline \text { Contribution margin } & \$ 250,000 \\\hline \text { Fixed expenses } & \underline { 280,000 } \\\hline \text { Operating income } & \underline { \$ 30,000 } \\\hline\end{array}$$ Tyler Corporation believes that 80% of the fixed costs would be avoidable if the product line was dropped. Based on the impact of company's operating income, Tyler should not drop the product line.

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