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andrew11 [14]
2 years ago
7

Beaver Company (a multi-product firm) produces 5,000 units of Product X each year. Each unit of Product X sells for $8 and has a

contribution margin of $5. If Product X is discontinued, $18,000 of fixed overhead would be eliminated. As a result of discontinuing Product X, the company's overall operating income would:_______.
A. Decreaseby $25,000
B. Increase by $43,000
C. Decrease by $7,000
D. Increase by $7,000
Business
1 answer:
Jlenok [28]2 years ago
5 0

Answer:

C. Decrease by $7,000

Explanation:

Calculation to determine what company's overall operating income would Decrease by

Using this formula

Overall operating income =(Product X units*Contribution margin )-Fixed overhead eliminated

Let plug in the formula

Overall operating income=(5,000 units*$5)-$18,000

Overall operating income=$25,000-$18,000

Overall operating income=$7,000 Decrease

Therefore As a result of discontinuing Product X, the company's overall operating income would:Decrease by $7,000

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3 years ago
In 2019, Teller Company sold 3,000 units at $600 each. Variable expenses were $420 per unit, and fixed expenses were $270,000. T
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Answer:

Break-even point in units= 1,500

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Giving the following information:

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