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Home Q & A Board Other Fields Homework Help Business Accounting
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7 years ago
The income statement for Sweet Dreams Company is divided by its two product lines, blankets and pillows, as follows:

   Blankets   Pillows   Total
Sales revenue   $820,000   $300,000   $1,120,000
Variable costs   465,000   240,000   705,000
Contribution margin   355,000   60,000   415,000
Fixed costs   66,000   76,000   142,000
Operating income (loss)   $289,000   $(16,000)   $273,000

If Sweet Dreams can eliminate total fixed costs of $28,000 by dropping the pillows line, operating income will increase by $16,000.
A) True
B) False
Textbook 
Horngren's Financial & Managerial Accounting, The Financial Chapters

Horngren's Financial & Managerial Accounting, The Financial Chapters


Edition: 5th
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#2
7 years ago
This was certainly a tough question, loving the expertise
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