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 Eagle Inc. eliminates the pillows product line, they will be able to eliminate all fixed costs associated with it. If the fixed costs associated with the pillows product line are greater than $70,000, eliminating the product line will result in a cost savings greater than $70,000. Thus, it would be financially beneficial for Eagle Inc. to eliminate the pillows product line.

The Income Statement for Eagle Inc