Randolf Corporation has three products X Y and Z and all cos

Randolf Corporation has three products (X, Y, and Z), and all costs are fully allocated in order to determine the profit provided by each product. For the year ended December 31, 2015, Randolf reported a profit of $30,000 for Product X, a profit of $20,000 for Product Y, and a loss of $10,000 for Product Z. If Product Z has avoidable costs of $8,000 and unavoidable costs of $15,000, which of the following statements is true? Select one: a. Randolf\'s total net income would increase by $10,000 if Product Z was eliminated. b. Product Z should be eliminated because the unavoidable costs exceed the amount of the net loss. c. None of the other options is true. d. Product Z should be continued because the revenue generated by the product exceeds the product\'s avoidable costs.

Solution

Product Z should be continued because the revenue generated by the product exceeds the product\'s avoidable costs. Option D is correct