Tremaine Inc. has three product lines: A, B, and C. A B C Total Sales $50,000...

Tremaine Inc. has three product lines: A, B, and C.

	A	B	C	Total
Sales	$50,000	$85,000	$90,000	$225,000
Variable costs	30,000	30,000	44,000	104,000
Contribution margin	20,000	55,000	46,000	121,000
Fixed costs	23,000	25,000	18,000	66,000
Net income	$ (3,000)	$30,000	$28,000	$ 55,000

28. Management is considering dropping product line A. If it is discontinued, $18,000 of its fixed costs are DTFC & can be avoided. The discontinuation of product line A would:

a.	increase Tremaine net income by $13,000.
b.	increase Tremaine net income by $21,000.
c.	decrease Tremaine net income by $2,000.
d.	increase Tremaine net income by $2,500.

29. Management is considering dropping product line A. If it is discontinued, (1) all of its fixed costs are common FC & cannot be avoided and (2) sales of Product B will increase by 60%. The discontinuation of product line A would:

a.	increase Tremaine net income by $13,000.
b.	increase Tremaine net income by $21,000.
c.	decrease Tremaine net income by $2,000.
d.	increase Tremaine net income by $2,500.

30. Management is considering dropping product line A. If it is discontinued, (1) all of its fixed costs are common FC & cannot be avoided and (2) the selling price of Product C will increase by 25%. The discontinuation of product line A would:

a.	increase Tremaine net income by $13,000.
b.	increase Tremaine net income by $21,000.
c.	decrease Tremaine net income by $2,000.
d.	increase Tremaine net income by $2,500.

Expert Solution

ekkarill92 answered 2 years ago

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