Question

Lisah, Inc., manufactures golf clubs in three models. For the year, the Big Bart line has a net loss of $10,000 from sales $200,000, variable costs $180,000, and fixed costs $30,000. If the Big Bart line is eliminated, $20,000 of fixed costs will remain. Prepare an analysis showing whether the Big Bart line should be eliminated.

Answer 1

Answer:

It should be continued.

Explanation:

$\left[\begin{array}{ccc}-&continued&discontinued&Sales&200,000&0&Variable Costing&-180,000&0&Contribution&20,000&0&Fixed Cost&-30,000&-20,000&Net Loss&-10,000&-20,000\end{array}\right]$

It is better to continue with the Big Bart Line, because the net loss would increase by 10,000 if eliminated

Answer 2

Answer:

Please see attachment

Explanation:

Please see attachment