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mik1104 mik1104
wrote...
Posts: 327
6 years ago
Lehigh Roller Skates has three product linesD, E, and F. The following information is available:

DEF
Sales revenue$70,000$50,000$30,000
Variable costs(20,000)(10,000)(12,000)
Contribution margin$50,000$40,000$18,000
Fixed costs(10,000)(5,000)(23,000)
Operating income (loss)$40,000$35,000$(5,000)

The company is deciding whether to drop product line F because it has an operating loss. Assume that $15,000 of total fixed costs could be eliminated by dropping F. What effect would this decision have on operating income?
A) Operating income will increase by $33,000.
B) Operating income will increase by $18,000.
C) Operating income will decrease by $3,000.
D) Operating income will decrease by $15,000.
Textbook 
Horngren's Accounting

Horngren's Accounting


Edition: 11th
Authors:
Read 39 times
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Replies
wrote...
6 years ago
 C
Explanation:  C)
Expected decrease in revenue$(30,000)
Expected decrease in total variable costs$12,000
Expected decrease in fixed costs15,000
Expected decrease in total costs27,000
Expected decrease in operating income$(3,000)
mik1104 Author
wrote...
6 years ago
Thank you for your assistance, again and again
wrote...
6 years ago
My pleasure
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