Brief Exercise 20-8 Lisah, Inc., manufactures golf clubs in three models. For th

Question

Brief Exercise 20-8 Lisah, Inc., manufactures golf clubs in three models. For the year, the Big Bart line has a net loss of $5,600 from sales $200,000, variable costs $175,000, and fixed costs $30,600. If the Big Bart line is eliminated, $19,600 of fixed costs will remain. Prepare an analysis showing whether the Big Bart line should be eliminated. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Net Income Continue Eliminate Increase (Decrease) Sales Variable costs Contribution margin Fixed costs Net Income (Loss) The Big Bart product line should be Click if you would like to Show Work for this question: Open Show Work

Explanation / Answer

Prepare analysis :

The big bart product line should be continue.

Continue Eliminate Net income increase (decrease) Sales 200000 0 -200000 Variable costs -175000 0 175000 Contribution margin 25000 0 -25000 Fixed costs -30600 -19600 11000 Net income (loss) -5600 -19600 -14000

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