Question

Lisah, Inc., manufactures golf clubs in three models. For the year, the Big Bart line has a net loss of $5,000 from sales $200,000, variable costs $176,000, and fixed costs $29,000. If the Big Bart line is eliminated, $20,400 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).)

continue eliminate net income (+ or -)
sales
variable costs
contribution margin
fixed costs
net income/ loss
The big bart product line should be continued or eliminated?

Answer 1

Answer: The big bart product line should be retained

Step-by-step explanation:

this is a chart that shows the ordered form, telling us if the big bart should be continued or eliminated.

To begin, let us prepare an analysis showing whether the Big Bart line should be eliminated

Continue Eliminate Net income increase (decrease)

• Sales 200000 0 -200000

Variable cost -176000 0 176000

Contribution margin 24000 0 -24000

Fixed cost -29000 -20400 8600

Net income -5000 -20400 -15400

From this we say that the big bart product line should be continue i.e it should be retained.

cheers i hope this helps!!!