Acompany has three product lines, one of which reflects the following results:

sales $215,000

variable expenses 125,000

contribution margin 90,000

fixed expenses 130,000

net loss $ (40,000)

if this product line is eliminated, 60% of the fixed expenses can be eliminated and the other 40% will be allocated to other product lines. if management decides to eliminate this product line, the company's net income will

a. increase by $40,000.

b. decrease by $90,000.

c. decrease by $12,000.

d. increase by $12,000.

The correct answer is C.

Explanation:

Giving the following information:

Sales $215,000

Variable expenses 125,000

Contribution margin 90,000

Fixed expenses 130,000

Net loss $ (40,000)

If this product line is eliminated, 60% of the fixed expenses can be eliminated and the other 40% will be allocated to other product lines.

Effect on income= - contribution loss + fix costs save

Effect on income= -90,000 + 78,000= - 12,000

Income will decrease by $12,000

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General partnership. A general partnership is the most basic form of partnership. ...

Limited partnership. Limited partnerships (LPs) are formal business entities authorized by the state. ...

Limited liability partnership. ...

Limited liability limited partnership