(Solved):Assume that Cane normally produces and sells 103,000 Betas per year. If Cane discontinues the…

 

Question

Assume that Cane normally produces and sells 103,000 Betas per year. If Cane discontinues the Beta product line, how much will profits increase or decrease?

 

EXPERT ANSWER

Although we don’t have all the information pertinent to this exact company, it is worthwhile to discuss what needs to be considered in a discontinuation analysis.

When deciding whether to discontinue a product or not, this company needs to consider only avoidable costs and incremental savings

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