Answer:
What is the amount of change in net income for the current year that will result from the discontinuance of Product G?
d.$30,000 decrease
Explanation:
The impact it's a decrease of $30,000 in the net income because the operating income of the product G before the discotinuance it's -$20,000 with a fixed cost of $50,000.
But now with the discotinuance of product G the impact in the total income will be all the fixed cost of $50,000.
The total income of the company with all the products it's $130,000 if the product G it's discontinued the it will have an negativly impact of -$30,000, then the result it's $100,000.
TOTAL
850.000 Sales
-580.000 Variable costs
270.000 Contribution Margin
-140.000 Fixed Cost
-720.000 Total Cost
130.000 Operating Income
Without Product G
TOTAL Product
640.000 Sales
-400.000 Variable costs
240.000 Contribution Margin
-140.000 Fixed Cost
-540.000 Total Cost
100.000 Operating Income
F G H TOTAL Product
300.000 210.000 340.000 850.000 Sales
-180.000 -180.000 -220.000 -580.000 Variable costs
120.000 30.000 120.000 270.000 Cont. Margin
-50.000 -50.000 -40.000 -140.000 Fixed Cost
-230.000 -230.000 -260.000 -720.000 Total Cost
70.000 -20.000 80.000 130.000 Operating Income
F G H TOTAL Product
300.000 - 340.000 640.000 Sales
-180.000 - -220.000 -400.000 Variable costs
120.000 - 120.000 240.000 Cont. Margin
-50.000 -50.000 -40.000 -140.000 Fixed Cost
-230.000 -50.000 -260.000 -540.000 Total Cost
70.000 -50.000 80.000 100.000 Operating Income
