The income statement for Nighty Night,Inc.is divided into two product lines,blankets and pillows,as follows:

Nighty Night,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 Nighty Night,Inc.is divided into two product lines,blankets and pillows,as follows:
  
Nighty Night,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 can allow for the elimination of more than $70,000 of fixed costs, then it would be financially beneficial for the company to do so. This would result in a reduction of expenses and potentially increase profitability. Therefore, it is true that Nighty Night, Inc. should eliminate the pillows product line if this condition is met.

The Income Statement for Nighty Night,Inc