Lusk Corporation produces and sells 20,000 units of Product X each month. The selling price of Product X is $30 per unit, and variable expenses are $21 per unit. A study has been made concerning whether Product X should be discontinued. The study shows that $50,000 of the $250,000 in fixed expenses charged to Product X would not be avoidable even if the product was discontinued. If Product X is discontinued, the company's overall net operating income would:
A)decrease by $70,000 per month.
B)increase by $70,000 per month.
C)increase by $20,000 per month.
D)decrease by $20,000 per month.

Question

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The Answer of Lusk Corporation produces and sells 20,000 units of Product X each month. The selling price of Product X is $30 per unit, and variable expenses are $21 per unit. A study has been made concerning whether Product X should be discontinued. The study shows that $50,000 of the $250,000 in fixed expenses charged to Product X would not be avoidable even if the product was discontinued. If Product X is discontinued, the company's overall net operating income would:
A)decrease by $70,000 per month.
B)increase by $70,000 per month.
C)increase by $20,000 per month.
D)decrease by $20,000 per month.

Lusk Corporation Produces and Sells 20,000 Units of Product X