Reference no: EM13827341
Foto Company manufactures and sells a product called JYMP. Results from last year from the sale of JYMP appear below:
Sales revenue (8,000 JYMPs @ $120 each) .............. $960,000
Variable costs ....................................... 640,000
Contribution margin .................................. 320,000
Fixed costs:
Salaries of line supervisors ......................... 100,000
Advertising expense .................................. 160,000
Allocated general overhead ........................... 132,000
Net loss ............................................. <72,000>
Foto Company is considering eliminating the JYMP product line. The company has determined that if the JYMP product line is discontinued, the contribution margin of its other products will increase by $120,000.
Calculate the increase in company profits if the JYMP product line is discontinued. Do not use decimals or type the word increase after your answer.
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