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Vaughn Manufacturing has three product lines. Its only unprofitable line is Corn Nuts, the results of which appear below for 2019:Sales$1530000Variable expenses1040000Fixed expenses600000Net loss$ (110000)If this product line is eliminated, 30% of the fixed expenses can be eliminated. How much are the relevant costs in the decision to eliminate this product line

Respuesta :

Answer: The relevant costs are $18000 in the decision to eliminate this product line.

Step-by-step explanation:

Since we have given that

Sales = $1530000

Variable expenses = $1040000

Fixed expenses = $600000

Net loss = $110000

If product line is eliminated, 30% of the fixed expenses can be eliminated.

So, it becomes,

30% of $600000 is given by

[tex]0.3\times 600000\\\\=\$18000[/tex]

Hence, the relevant costs are $18000 in the decision to eliminate this product line.

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