Question

A condensed income statement for Gilbert, Inc. follows: (amounts are shown in thousands)

Products	F				G				H				Total
Sales (total)	$	250			$	185.0			$	370			$	805.0
Total Unit-level Costs		(140	)			(161.0	)			(210	)			(511.0	)
Contribution Margin		110				24.0				160				294.0
Company-wide Facility-Level Costs		(26.0	)			(31.0	)			(50	)			(107.0	)
Income (Loss)	$	84.0			$	(7.0	)		$	110			$	187.0

Gilbert's management is considering whether to eliminate manufacturing product G at the beginning of the next year. The elimination will have no effect on the sales or unit-level costs of products F and H. The change in income that would result from eliminating product G is

Answer 1

Solution:
	DIFFERENTIAL ANALYSIS
	PROPOSAL TO CONTINUED OR DISCONTINUED THE PRODUCT
		Product F	Product G	Product H	Total
	Sales	$                          250	$                              -	$                                   370	$                           370
	Cost:
	Total Unit Level Costs	$                        -140	$                              -	$                                 -210	$                         -350
	Contribution Margin	$                          110	$                              -	$                                   160	$                           270
	Company - Wide Facility - Level Costs	$                           -26	$                            -31	$                                   -50	$                         -107
	Income (Loss)	$                            84	$                            -31	$                                   110	$                           163
	IF we can discountinue the product G than total income will reduces from $ 187 to $ 163.
	It means the total income is reduced by $ 24 which is equal to contribution generated by Product G
	Answer = increases the loss by $ 24