The income statement for Eagle Inc. is divided into two product lines, blankets and pillows, as follows: Eagle Inc. should eliminate the pillows product line only, if by doing so, they can eliminate more than $70,000 of fixed costs.

Question

The income statement for Eagle Inc. is divided into two product lines, blankets and pillows, as follows:  Eagle Inc. should eliminate the pillows product line only, if by doing so, they can eliminate more than $70,000 of fixed costs.

Quizplus · Accepted Answer

If eliminating the pillows product line results in a reduction of fixed costs by more than $70,000, then it would be beneficial for Eagle Inc. to eliminate that product line. This is because the decrease in fixed costs would result in a higher overall net income for the company.

The Income Statement for Eagle Inc