Purchase Solution

Continue or discontinue a Product Line

Not what you're looking for?

Ask Custom Question

A study has been conducted to determine if a product line should be discontinued. The contribution margin in the product line is $300,000 per year. Fixed expenses allocated to the product line are $390,000 per year. It is estimated that $240,000 of these fixed expenses could be eliminated if the product line is discontinued. What happens to the company's overall net operating income? Does it increase or decrease, and by how much?

Purchase this Solution

Solution Summary

Solution calculates the effect on net operating income if a production line is discontinued.

Solution Preview

Net operating income=Contribution margin-Fixed expenses
=300000-390000
=-$90000

Now ...

Solution provided by:
Education
  • BEng (Hons) , Birla Institute of Technology and Science, India
  • MSc (Hons) , Birla Institute of Technology and Science, India
Recent Feedback
  • "Thank you"
  • "Really great step by step solution"
  • "I had tried another service before Brain Mass and they pale in comparison. This was perfect."
  • "Thanks Again! This is totally a great service!"
  • "Thank you so much for your help!"
Purchase this Solution


Free BrainMass Quizzes
Operations Management

This quiz tests a student's knowledge about Operations Management

IPOs

This Quiz is compiled of questions that pertain to IPOs (Initial Public Offerings)

Six Sigma for Process Improvement

A high level understanding of Six Sigma and what it is all about. This just gives you a glimpse of Six Sigma which entails more in-depth knowledge of processes and techniques.

Accounting: Statement of Cash flows

This quiz tests your knowledge of the components of the statements of cash flows and the methods used to determine cash flows.

Business Processes

This quiz is intended to help business students better understand business processes, including those related to manufacturing and marketing. The questions focus on terms used to describe business processes and marketing activities.