You start at -1, 1. Move left three units and right eight units. Where do you end?
2 answers:
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Answer: The relevant costs are $18000 in the decision to eliminate this product line.
Step-by-step explanation:
Since we have given that
Sales = $1530000
Variable expenses = $1040000
Fixed expenses = $600000
Net loss = $110000
If product line is eliminated, 30% of the fixed expenses can be eliminated.
So, it becomes,
30% of $600000 is given by
Hence, the relevant costs are $18000 in the decision to eliminate this product line.