Question

Lisah, Inc., manufactures golf clubs in three models. For the year, the Big Bart line has a net loss of $5,700 from sales $201,000, variable costs $176,000, and fixed costs $30,700. 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. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Continue Eliminate Net Income Increase (Decrease) Sales $enter sales in dollars $enter sales in dollars $enter sales in dollars Variable costs enter variable costs in dollars enter variable costs in dollars enter variable costs in dollars Contribution margin enter a subtotal of the two previous amounts enter a subtotal of the two previous amounts enter a subtotal of the two previous amounts Fixed costs enter fixed costs in dollars enter fixed costs in dollars enter fixed costs in dollars Net Income / (Loss) $enter net income or loss in dollars $enter net income or loss in dollars $enter net income or loss in dollars The Big Bart product line should be select an option. Click if you would like to Show Work for this question: Open Show Work

Answer 1

Answer:

The computation of given question is below:-

Explanation:

                                 Continue          Eliminate     Net income/Loss

Sales                         $201,000         $0                ($201,000)

Variable cost            $176,000          $0                $176,000

Contribution margin $25,000          $0                 ($25,000)

Fixed cost                  $30,700          $20,000       $10,700

Net income/ loss       ($5,700)          ($20,000)      ($14,300)

In Net Income, Eliminating the product line is leading to Decrease by $15,400, the product line should be continued.