Iakisthike, LLC has two lines of products, Regular and Super, and is thinking about discontinuing the weaker Regular line. If the regular line is dropped, company-wide fixed manufacturing costs would fall by 7%. The following table displays information regarding operations from the most recent year: Regular Super Total Units 7,000 3,000 10,000 Sales $210,000 $750,000 $960,000 Less: Cost of Goods Sold $140,000 $375,000 $515,000 Gross Margin $70,000 $375,000 $445,000 Less: Selling Expenses $70,000 $135,000 $205,000 Operating Income $0 $240,000 $240,000 Variable manufacturing costs included in cost of goods sold amount to $18 per unit for Regular and $109 per unit for Super; other manufacturing costs are fixed. Fixed selling expenses are $7 per unit for Regular and $22 per unit for Super; remaining selling expense amounts are variable. If the Regular line is discontinued, operating income would (increase, decrease, or no change) by $_____
Iakisthike, LLC has two lines of products, Regular and Super, and is thinking about discontinuing the weaker Regular line. If the regular line is dropped, company-wide fixed manufacturing costs would fall by 7%. The following table displays information regarding operations from the most recent year: Regular Super Total Units 7,000 3,000 10,000 Sales $210,000 $750,000 $960,000 Less: Cost of Goods Sold $140,000 $375,000 $515,000 Gross Margin $70,000 $375,000 $445,000 Less: Selling Expenses $70,000 $135,000 $205,000 Operating Income $0 $240,000 $240,000 Variable manufacturing costs included in cost of goods sold amount to $18 per unit for Regular and $109 per unit for Super; other manufacturing costs are fixed. Fixed selling expenses are $7 per unit for Regular and $22 per unit for Super; remaining selling expense amounts are variable. If the Regular line is discontinued, operating income would (increase, decrease, or no change) by $_____
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Iakisthike, LLC has two lines of products, Regular and Super, and is thinking about discontinuing the weaker Regular line. If the regular line is dropped, company-wide fixed
| Regular | Super | Total | |
| Units | 7,000 | 3,000 | 10,000 |
| Sales | $210,000 | $750,000 | $960,000 |
| Less: Cost of Goods Sold | $140,000 | $375,000 | $515,000 |
| Gross Margin | $70,000 | $375,000 | $445,000 |
| Less: Selling Expenses | $70,000 | $135,000 | $205,000 |
| Operating Income | $0 | $240,000 | $240,000 |
Variable manufacturing costs included in cost of goods sold amount to $18 per unit for Regular and $109 per unit for Super; other manufacturing costs are fixed. Fixed selling expenses are $7 per unit for Regular and $22 per unit for Super; remaining selling expense amounts are variable.
If the Regular line is discontinued, operating income would (increase, decrease, or no change) by $_____
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