Management is considering the discontinuance of the manufacture and sale of product g 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 products f and h. the amount of change in profit for the current year that will result from the discontinuance of product g is a a. exist30,000 increase b, exist20,000 increase c exist30,000 decrease d. exist20,000 decrease

Option C. 30,000 decrease

Explanation:

At the moment Product G is covering its own variable cost which is 180,000 from its sale figure of 210,000. So there is a balance of 30,000 which product G is contributing to offset the Fixed costs of the company.

It will be inadvisable for management to discontinue the production of Product G because it appears to be making a loss. The loss is as a result of the fixed cost of 50,000 imposed (apportioned) to the product. So product G can only cover 30,000 out of this 50,000 which is resulting in the 20,000 loss.

If the product is discontinued, the 30,000 contribution of product G will be lost which will lead to a decrease in profit of that amount.

answer; i believe both technician (a) and (b) are correct; /// good luck

reducing the scale of the market for a new product.