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Onxy Onxy
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7 years ago
A manager at the Marina Concepts Store sells three levels of boat heaters, low, medium, and high, to house their winter boats. The managerial accountant reported the following information:

      Low Lev.   Medium Lev.   High Lev.
Sales   $25,000   $45,000   $20,000
Variable costs      4,000      6,000     12,200
Contribution margin   21,000   39,000   7,800
Fixed costs:
   Avoidable   4,000   6,000   4,400
   Unavoidable     5,000   ..5,500     3,500
Operating income   $12,000   $27,500   $(100)

The high-level heater is operating at a loss. If the manager discontinued the high-level heater, what is the increase or decrease in operating income? What is the increase or decrease in operating income if the manager discontinued the heater and rented out the space used to store the heater for $11,000 per year?
A) $800 increase; $8,500 increase
B) $900 decrease; $9,200 decrease
C) $1,000 increase; $9,300 increase
D) $3,400 decrease; $7,600 increase
E) $1,600 increase; $9,600 increase
Textbook 
Managerial Accounting: Decision Making and Motivating Performance

Managerial Accounting: Decision Making and Motivating Performance


Edition: 1st
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lordingtonlordington
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Onxy Author
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