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Cecil Company discontinues the stamp line net income

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Cecil Company presently has three product lines: papers, stamps and computer ribbons. The company is profitable overall but is considering discontinuing the stamp line because of losses from that line. Current data on the stamp line is as follows:

Sales Revenue $27000
Variable Costs $19000
Direct Avoidable Fixed Costs $5000
Indirect Allocated Fixed Costs $6000

Net Income (LOSS) on Stamp Line ($3000)

Given this information, if Cecil discontinues the stamp line, overall net income for the company would

a) increase by 3000
b) decrease by 3000
c) decrease by 6000
d) decrease by 8000
e) none of the above

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Solution Summary

The net income for Cecil Company discontinued stamp line. The direct and indirecte avoidable and allocated fixed costs are given.

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If it discontinues the stamp line, it would save following ...

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