Question

answer the following question in the given format. Format : The answer should contain a main answer portion consisting of 2-3 sentences in which 1 keyword should be boled. The answer should contain an explanation portion consisting of 3 or 4 paragraphs each with 5 sentences in which each sentence should consist a bolded key word. Question : How much will overall company net income change if the company decides to discontinue the stamp line?

Answer 1

Main answer: If the company decides to discontinue the stamp line, the overall company net income will change significantly.

Explanation: Net income is the amount of profit a company generates after subtracting all expenses from its total revenue. Discontinuing a product line will affect both revenue and expenses, since there will be no more sales revenue from that product but also potentially fewer expenses related to production, marketing, and distribution.

The impact of discontinuing the stamp line on net income will depend on the contribution margin of the product (the difference between the selling price and variable costs) and the fixed costs allocated to that product line. If the contribution margin is positive and greater than the fixed costs, the discontinuation may result in a decrease in net income. But if the contribution margin is negative or the fixed costs are greater than the contribution margin, the discontinuation may actually lead to an increase in net income.

In addition to affecting net income, discontinuing a product line may also have other strategic implications such as affecting the company's market share, customer loyalty, and brand image. Therefore, it is important for the company to carefully evaluate the costs and benefits of such a decision before taking any action.

Step-by-step explanation: