Lusk Company Produces and Sells 15,000 Units of Product a Each

question 39

Multiple Choice

Lusk Company produces and sells 15,000 units of Product A each month.The selling price of Product A is $20 per unit,and variable expenses are $14 per unit.A study has been made concerning whether Product A should be discontinued.The study shows that $70,000 of the $100,000 in fixed expenses charged to Product A would continue even if the product was discontinued.These data indicate that if Product A is discontinued,the company's overall net operating income would:

• A)decrease by $60,000 per month
• B)increase by $10,000 per month
• C)increase by $20,000 per month
• D)decrease by $20,000 per month

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