Reference no: EM13160205

Abel Company produces three versions of baseball bats: wood, aluminum, and hard rubber. A condensed segmented income statement for a recent period follows:
Wood Aluminum Hard Rubber Total
Sales $500,000 $200,000 $65,000 $765,000
Variable expenses 325,000 140,000 58,000 523,000
Contribution margin 175,000 60,000 7,000 242,000
Fixed expenses 75,000 35,000 22,000 132,000
Net income (loss) $100,000 $ 25,000 $(15,000) $110,000

Assume none of the fixed expenses for the hard rubber line are avoidable. What will be total net income if the line is dropped?
A) $125,000
B) $103,000
C) $105,000
D) $140,000

Assume all of the fixed expenses for the hard rubber line are avoidable. What will be total net income if the line is dropped?
A) $125,000
B) $103,000
C) $105,000
D) $140,000

If the total net income after dropping the hard rubber line is $105,000, hard rubber's avoidable fixed expenses were
a. $20,000.
b. $2,000.
c. $7,000.
d. $5,000.