What will happen to the company net income

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Reference no: EM132550619

Sheffield Machines has four product lines, one of which reflects the following results:

Sales $218000

Variable expenses116000

Contribution margin 102000

Fixed expenses 116000

Net loss$ (14000)

Question 1: If this product line is eliminated, 35% of the fixed expenses can be eliminated and the other 65% will be allocated to other product lines. If management decides to eliminate this product line, what will happen to the company's net income?

Option 1: It will increase by $14000.

Option 2: It will decrease by $61400.

Option 3: It will decrease by $47400.

Option 4: It will increase by $40600.

Reference no: EM132550619

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