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Home Q & A Board Other Fields Homework Help Business Accounting
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zachdit zachdit
wrote...
6 years ago
Assuming the Fashion line is discontinued, total fixed costs remain unchanged, and the space formerly used to produce the line is rented for $30,000 per year, how will operating income be affected?

A) Decrease $10,000
B) Increase $59,000
C) Increase $10,000
D) Increase $162,000

Please dont just write the answee this is my ACCT 212 Test questios. could you also type how you got it. Thanks! 
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wrote...
#1
Staff Member
6 years ago
Answer: C

Explanation:
Sales Revenue 340,000 Plus Additional Revenue 30,000
Total Revenue 370,000
Less Variable Expenses (235,000)
Contribution Margin 135,000
Less Fixed Expenses (76,000)
New Net OI 59,000
Less original OI (49,000)
Increase in OI $ 10,000
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