Kahn Corporation (a multi-product company) produces and sells 8,000 units of Product X each year.Each unit of Product X sells for $10 and has a contribution margin of $6.If Product X is discontinued, $50,000 of the $60,000 in annual fixed costs charged to Product X could be eliminated.The annual financial advantage (disadvantage) for the company of eliminating this product should be:

A) $2,000
B) ($2,000)
C) $12,000
D) ($12,000)

Question

Angel Gonzalez · Accepted Answer

Final Answer : A, Explanation :    If Product X were eliminated, the company would avoid the negative segment margin of $2,000.

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