Question

Abel Company produces three versions of baseball bats: wood, aluminum, and hard rubber. A condensed segmented income statement for a recent period follows: Wood Aluminum Hard Rubber Total Sales $500000 $200000 $65000 $765000 Variable expenses 325000 140000 58000 523000 Contribution margin 175000 60000 7000 242000 Fixed expenses 75000 35000 22000 132000 Net income (loss) $100000 $ 25000 $(15000) $110000 Assume all of the fixed expenses for the hard rubber line are avoidable. What will be total net income if the line is dropped?a.$125,000
b.$103,000
c.$105,000
d.$140,000

Answer 1

Answer:

Total Net income without hard rubber lines  = $125,000

Explanation:

Abel Company produces three versions of baseball bats: wood, aluminum, and hard rubber.

A condensed segmented income statement for a recent period follows: Wood Aluminum Hard Rubber

Total Sales $500000 $200000 $65000 $765000

Variable expenses 325000 140000 58000 523000

Contribution margin 175000 60000 7000 242000

Fixed expenses 75000 35000 22000 132000

Net income (loss) $100000 $ 25000 $(15000) $110000

Assume all of the fixed expenses for the hard rubber line are avoidable. What will be total net income if the line is dropped?a.$125,000

                         Wood       Aluminum    

Total Sales      $500000 $200000      

Variable expenses 325000 140000  

Contribution margin 175000 60000    

Fixed expenses        75000 35000  

Net income           $100000 $ 25000

Total Net income  = $125,000