The Tangier Company Is Considering Eliminating the Following Product Line

question 94

Multiple Choice

The Tangier Company is considering eliminating the following product line: $\begin{array}{lr}&\underline{\text { Product AXP}}\\\text { Sales}&\$80,000\\\text { Less variable costs: }\\\text { Raw materials } & 50,000 \\\text { Direct labor } & \underline{10,000}\\\text { Contribution margin } & \$ 20,000 \\\text { Less fixed costs: } & \\\text { Production costs allocated to products } &\underline{30,000} \\\text { Profit (Loss) } & \$(10,000) \\\end{array}$ 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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