24) Armor Sports, Inc. has two product lines-batting helmets and football helmets. The income statement data for the most recent year is as follows: Sales revenue Variable costs Contribution margin Fixed costs Operating income (loss) Total $930,000 (540,000) $390,000 (180,000) $210,000 Batting Helmets $600,000 (250,000) $350,000 (90,000) $260,000 Football Helmets $330,000 (290,000) $40,000 (90,000) $(50,000) 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 $90,000. B) Operating income will decrease by $40,000. C) Operating income will decrease by $330,000. D) Operating income will increase by $50,000.
24) Armor Sports, Inc. has two product lines-batting helmets and football helmets. The income statement data for the most recent year is as follows: Sales revenue Variable costs Contribution margin Fixed costs Operating income (loss) Total $930,000 (540,000) $390,000 (180,000) $210,000 Batting Helmets $600,000 (250,000) $350,000 (90,000) $260,000 Football Helmets $330,000 (290,000) $40,000 (90,000) $(50,000) 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 $90,000. B) Operating income will decrease by $40,000. C) Operating income will decrease by $330,000. D) Operating income will increase by $50,000.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:24) Armor Sports, Inc. has two product lines-batting helmets and football helmets. The income
statement data for the most recent year is as follows:
Sales revenue
Variable costs
Contribution margin
Fixed costs
Operating income (loss)
Total
$930,000
(540,000)
$390,000
(180,000)
$210,000
Batting Helmets
$600,000
(250,000)
$350,000
(90,000)
$260,000
Football Helmets
$330,000
(290,000)
$40,000
(90,000)
$(50,000)
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 $90,000.
B) Operating income will decrease by $40,000.
C) Operating income will decrease by $330,000.
D) Operating income will increase by $50,000.
24)
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