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7 years ago
Iver Roller Skates has three product lines - D, E, and F. The following information is available:

   D   E   F
Sales revenue   $90,000   $50,000   $30,000
Variable costs   (40,000)   (10,000)   (11,000)
Contribution margin   $50,000   $40,000   $19,000
Fixed costs   (10,000)   (10,000)   (24,000)
Operating income (loss)   $40,000   $30,000   $(5,000)

The company is deciding whether to drop product line F because it has an operating loss. Assuming fixed costs are unavoidable, if Iver drops product line F and rents the space formerly used to produce product F for $19,000 per year, total income will be ________.
A) $11,000
B) $65,000
C) $24,000
D) $19,000
Textbook 
Horngren's Financial & Managerial Accounting, The Financial Chapters

Horngren's Financial & Managerial Accounting, The Financial Chapters


Edition: 5th
Authors:
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Deprecated Author
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#2
7 years ago
Makes perfect sense, thx
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