Employee looks at the analysis and exclaims


A new employee looks at the analysis and exclaims, "We'll lose money with either of these alternatives! Let's just throw these units in the trash!" Suppose the alternative to trashing is choosing the more profitable of the two alternatives (that the new employee looked at and did not like). What effect will the trashing option (that the new employee wants) have on net income?

A) Net income will increase by $35 per unit for each unit discarded.

B) Net income will decrease by $115 per unit for each unit discarded.

C) It will have no effect on net income.

D) Net income will decrease by $265 per unit for each unit discarded.

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Accounting Basics: Employee looks at the analysis and exclaims
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