Paddington Company sells three products in its retail stores: teddy bears, baby dolls, and blocks....
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Accounting
Paddington Company sells three products in its retail stores: teddy bears, baby dolls, and blocks. Results for the year are below:
Teddy Bears Baby Dolls Blocks Total Revenue $35,000 $43,000 $26,000 $104,000 Variable costs 28,000 28,000 16,000 72,000 Fixed costs 8,000 7,000 7,000 22,000 Net income (loss) $ (1,000) $ 8,000 $ 3,000 $ 10,000
Paddington is considering discontinuing the Teddy Bears product. Assuming 50% of the fixed costs could be eliminated with the product, by what amount would total net income increase or decrease* if the Teddy Bears were eliminated?
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