Lusk Company produces and sells 15,000 units of Product A each month. price of Product A is $20 per unit, and variable expenses are $14 per unit. A study has been made concerning whether Product A should be discontinued. The study shows that
$70,000 of the $100,000 in fixed expenses charged to Product A would continue even if the product were discontinued. These data indicate that if Product A is discontinued, the company's overall net operating income would:
A)decrease by $20,000 per month.
B)increase by $20,000 per month.
C)increase by $10,000 per month.
D)decrease by $60,000 per month.

Question

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The Answer of Lusk Company produces and sells 15,000 units of Product A each month. price of Product A is $20 per unit, and variable expenses are $14 per unit. A study has been made concerning whether Product A should be discontinued. The study shows that
$70,000 of the $100,000 in fixed expenses charged to Product A would continue even if the product were discontinued. These data indicate that if Product A is discontinued, the company's overall net operating income would:
A)decrease by $20,000 per month.
B)increase by $20,000 per month.
C)increase by $10,000 per month.
D)decrease by $60,000 per month.

Lusk Company Produces and Sells 15,000 Units of Product a Each