Question

Crane Company produces three versions of baseball bats: wood, aluminum, and hard rubber. A condensed segmented income statement for a recent period follows: Wood Aluminum Hard Rubber Total Sales $540000 $230000 $65000 $835000 Variable expenses 340000 170000 58000 568000 Contribution margin 200000 60000 7000 267000 Fixed expenses 75000 35000 22000 132000 Net income (loss) $125000 $ 25000 $(15000) $135000 Assume all of the fixed expenses for the hard rubber line are avoidable. What will be total net income if the line is dropped

Answer 1

the net income in the case when the line is dropped is $150,000

Step-by-step explanation:

The computation of the net income in the case when the line is dropped is as followS:

= Total net income + fixed cost of hard rubber - contribution margin of the hard rubber

= $135,000 + $22,000 - $7,000

= $150,000

hence, the net income in the case when the line is dropped is $150,000