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Home Q & A Board Other Fields Homework Help Business Accounting
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lanachase lanachase
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5 years ago
Faros Hats, Inc. has two product linesbatting helmets and football helmets. The income statement data for the most recent year is as follows:

TotalBatting HelmetsFootball Helmets
Sales revenue$1,050,000$700,000$350,000
Variable costs(530,000)(250,000)(280,000)
Contribution margin$520,000$450,000$70,000
Fixed costs(200,000)(90,000)(110,000)
Operating income (loss)$320,000$360,000$(40,000)

What is the effect of dropping football helmets line on the operating income of the company? (Assume that fixed costs remain unchanged and that there would be no adverse effect on other sales.)
A) Operating income will increase by $40,000.
B) Operating income will increase by $90,000.
C) Operating income will decrease by $70,000.
D) Operating income will decrease by $350,000.
Textbook 
Horngren's Accounting

Horngren's Accounting


Edition: 11th
Authors:
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Jojo2youJojo2you
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lanachase Author
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5 years ago
Ready for finals now Monkey
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5 years ago
Good luck my friend!
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5 years ago
thank you
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