ll About Animals has two product lines: Cat food and Dog food. Contribution margin income statement data for the most recent year follow: Total Cat Food Dog Food Sales revenue $435,000 $350,000 $85,000 Variable expenses $61,000 $21,000 $40,000 Contribution margin $374,000 $329,000 $45,000 Fixed expenses $101,000 $49,000 $52,000 Operating income (loss) $273,000 $280,000 $(7,000)Assuming the Dog food is discontinued, total fixed costs remain unchanged, and the space formerly used to produce the line is rented for $26,000 per year, how will operating income be affected? Question 32 options: Increase $254,000 Increase $527,000 Decrease $19,000 Increase $19,000
ll About Animals has two product lines: Cat food and Dog food. Contribution margin income statement data for the most recent year follow: Total Cat Food Dog Food Sales revenue $435,000 $350,000 $85,000 Variable expenses $61,000 $21,000 $40,000 Contribution margin $374,000 $329,000 $45,000 Fixed expenses $101,000 $49,000 $52,000 Operating income (loss) $273,000 $280,000 $(7,000)Assuming the Dog food is discontinued, total fixed costs remain unchanged, and the space formerly used to produce the line is rented for $26,000 per year, how will operating income be affected? Question 32 options: Increase $254,000 Increase $527,000 Decrease $19,000 Increase $19,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
All About Animals has two product lines: Cat food and Dog food. Contribution margin income statement data for the most recent year follow:
Assuming the Dog food is discontinued, total fixed costs remain unchanged, and the space formerly used to produce the line is rented for $26,000 per year, how will operating income be affected?
| | Total | Cat Food | Dog Food |
| Sales revenue | $435,000 | $350,000 | $85,000 |
| Variable expenses | $61,000 | $21,000 | $40,000 |
| Contribution margin | $374,000 | $329,000 | $45,000 |
| Fixed expenses | $101,000 | $49,000 | $52,000 |
| Operating income (loss) | $273,000 | $280,000 | $(7,000) |
Question 32 options:
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|
Increase $254,000
|
|
|
Increase $527,000
|
|
|
Decrease $19,000
|
|
|
Increase $19,000
|
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