Question

Lisah, Inc., manufactures golf clubs in three models. For the year, the Big Bart line has a net loss of $5,700 from sales $201,000, variable costs $176,000, and fixed costs $30,700. 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).) Continue Eliminate Net Income Increase (Decrease) Sales $enter sales in dollars $enter sales in dollars $enter sales in dollars Variable costs enter variable costs in dollars enter variable costs in dollars enter variable costs in dollars Contribution margin enter a subtotal of the two previous amounts enter a subtotal of the two previous amounts enter a subtotal of the two previous amounts Fixed costs enter fixed costs in dollars enter fixed costs in dollars enter fixed costs in dollars Net Income / (Loss) $enter net income or loss in dollars $enter net income or loss in dollars $enter net income or loss in dollars The Big Bart product line should be select an option. Click if you would like to Show Work for this question: Open Show Work

Answer 1

The computation of given question is below:-

Step-by-step explanation:

Continue Eliminate Net income/Loss

Sales $201,000 $0 ($201,000)

Variable cost $176,000 $0 $176,000

Contribution margin $25,000 $0 ($25,000)

Fixed cost $30,700 $20,000 $10,700

Net income/ loss ($5,700) ($20,000) ($14,300)

In Net Income, Eliminating the product line is leading to Decrease by $15,400, the product line should be continued.