Reference no: EM132758791

The condensed income statement for a business for the past year is as follows:

                                              Product

                                        White                Black

Sales                        $750,000         $550,000

Less variable costs         400,000         380,000

Contribution margin          $350,000           $170,000

Less fixed costs                   240,000           100,000

Income (loss) from operations $110,000          $ 70,000

Problem 1: Management is considering the discontinuance of the manufacture and sale of Black at the beginning of the current year. The discontinuance would have no effect on the total fixed costs and expenses or on the sales of White. What is the amount of change in net income for the current year that will result from the discontinuance of Black?

a. $170,000 decrease

b. $70,000 decrease

c. $40,000 decrease

d. $180,000 decrease