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 $3,500 from sales $201,000, variable costs $175,000, and fixed costs $29,500. If the Big Bart line is eliminated, $20,000 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 Increase (Decrease) Continue Eliminate 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

Continue Eliminate Net income Increase/Decrease Sales $        201,000 $                       (201,000) Variable Cost $        175,000 $                         175,000 Contribution margin $          26,000 $                         (26,000) Fixed cost $          29,500 $         20,000 $                              9,500 Net income/Loss $          (3,500) $       (20,000) $                           16,500 The big bart product line should be continued.

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