Asked by Claudia Reyes on Jun 27, 2024
Verified
Assume that discontinuing the manufacture and sale of Product J will not affect the sale of other products. If the company discontinues Product J, the change in annual net income due to this decision will be a:
A) $145,000 increase.
B) $25,000 decrease.
C) $315,000 decrease.
D) $170,000 decrease.
Variable Production Costs
Variable production costs are those costs that vary directly with the level of production output, such as raw materials and direct labor.
Traceable Fixed Advertising
Costs of advertising that can be directly associated with a specific product or segment of the business.
Fixed General Factory Overhead
Costs associated with operating a factory that do not vary with the level of production, such as factory rent, insurance, and salaries of managers.
- Evaluate the economic consequences of terminating a product or department.
Verified Answer
Learning Objectives
- Evaluate the economic consequences of terminating a product or department.
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