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lusk corporation produces and sells 15,600 units of product x each month. the selling price of product x is $26 per unit, and variable expenses are $20 per unit. a study has been made concerning whether product x should be discontinued. the study shows that $73,000 of the $106,000 in monthly fixed expenses charged to product x would not be avoidable even if the product was discontinued. if product x is discontinued, the monthly financial advantage (disadvantage) for the company of eliminating this product should be:
lusk corporation produces and sells 15,600 units of product x each month. the selling price of product x is $26 per unit, and variable expenses are $20 per unit. a study has been made concerning whether product x should be discontinued. the study shows that $73,000 of the $106,000 in monthly fixed expenses charged to product x would not be avoidable even if the product was discontinued. if product x is discontinued, the monthly financial advantage (disadvantage) for the company of eliminating this product should be:
Thelusk corporationproduces and sells 15,600 units of products x each month. theselling priceof product x is $26 per unit, and variable expenses are $20 per unit. the monthlyfinancial advantage(disadvantage) for the company of eliminating this product should be: $21,400.What isthe financial advantage?Generally, To determine thefinancial advantage(or disadvantage) of eliminating product x, we need to calculate the difference between the revenue that the company would lose by not selling product x and the expenses that the company would save by not producing and selling product x.First, let's calculate thetotal revenuefrom product x by multiplying the number of units sold by the selling price per unit: 15,600 units * $26/unit = $406,400Next, let's calculate thetotal variable expensesby multiplying the number of units sold by the variable expenses per unit: 15,600 units * $20/unit = $312,000Now, let's subtract the variable expenses from the total revenue to get the contribution margin for product x: $406,400 - $312,000 = $94,400Finally, let's subtract the non-avoidable fixed expenses of $73,000 from the contribution margin to get the financial advantage (or disadvantage) of eliminating product x: $94,400 - $73,000 = $21,400Therefore, the financial advantage (disadvantage) for the company of eliminating product x is $21,400.Read more aboutfinancial advantagebrainly.com/question/22248894#SPJ1...