Assume that discontinuing Product J would result in a $30,000 increase in the contribution margin of other product lines.If Bingham chooses to discontinue Product J,then the change in net income next year due to this action will be a:
A) $145,000 decrease.
B) $5,000 increase.
C) $120,000 increase.
D) $145,000 increase.

Question

Quizplus · Accepted Answer

Discontinuing Product J results in a $30,000 increase in the contribution margin of other product lines. If the net effect is a $5,000 increase, it implies that the loss from discontinuing Product J is $25,000, leading to a net increase of $5,000 in income.

Assume That Discontinuing Product J Would Result in a $30,000