Reference no: EM132667832
Problem 1: Bubblemania has three product lines - A,B, and C. Product line B appears to be unprofitable, and management is considering discontinuing the line. Based on the information below, how would the discontinuation of Product line B affect net income?
A B C Total
Sales $ 10,000 $ 9,000 $ 12,000 $ 31,000
Variable Costs $ 4,500 $ 7,000 $ 6,000 $ 17,500
Contribution Margin $ 5,500 $ 2,000 $ 6,000 $ 13,500
Fixed Costs $ 3,500 $ 6,000 $ 3,000 $ 12,500
Net Income $ 2,000 $ (4,000) $ 3,000 $ 1,000
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