Bramble, Inc., manufactures golf clubs in three models. For the year, the Big Bart line has a net loss of $6,600 from sales $200,000, variable costs $176,000, and fixed costs $30,600. If the Big Bart line is eliminated, $20,600 of fixed costs will remain. Prepare an analysis showing whether the Big Bart line should be eliminated. (Enter negative amounts using either a negative sign preceding the number e. g. -45 or parentheses e. g. (45).)

Answer and Explanation:

The preparation of the analysis is shown below:

Particulars   ContinueEliminate      Net Income (Decrease)

Sales          $200,000        $0          -$200,000

Less: Variable Costs $176,000$0         -$176,000

Contribution margin$24,000$0          -$24,000

Fixed Costs$30,600           $20,600   $10,000

Net Income/Loss-$6,600   -$20,600   -$14,000

As we can see that in both the cases whether eliminate or continue the amounts comes in negative but in continue there is a less amount of loss as compared to eliminated one

Therefore, in this case, the big Bart line could be continued

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