Lisah Inc manufactures golf clubs in three models For the ye

Lisah, Inc., manufactures golf clubs in three models. For the year, the Big Bart line has a net loss of $4,900 from sales $200,000, variable costs $175,000, and fixed costs $29,900. If the Big Bart line is eliminated, $19,400 of fixed costs will remain. Prepare an analysis showing whether the Big Bart line should be eliminated. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)

Solution

Lisah Inc Big Bart Line Details Continue Eliminate Increase/Decrease Sales                  200,000 0 Variable Cost                  175,000 0 Contribuion Margin                    25,000 0 Fixed costs                    29,900                 19,400 Net Income (loss) $                (4,900) $          (19,400) $          (14,500) The Big Bart Product Line should be continued as the net loss is more in eliminating the department than continuing