Motion Rollerblades has three product lines-D, E, and F. The following information is available: E $60,000 (5,000) $55,000 Sales revenue Variable costs Contribution margin Fixed costs Operating income (loss) $90,000 (40,000) $50,000 OA. Operating income will increase $6,000. OB. Operating income will increase $18,000. OC. Operating income will increase $24,000. OD. Operating income will decrease $18,000. (15,000) $35,000 (15,000) $40,000 F $30,000 (12,000) $18,000 (24,000) $(6,000) The company is deciding whether to drop product line F because it has an operating loss. Assuming fixed costs are unavoidable, if Motion drops product line F and does not replace it, what effect will this have on operating income?
Motion Rollerblades has three product lines-D, E, and F. The following information is available: E $60,000 (5,000) $55,000 Sales revenue Variable costs Contribution margin Fixed costs Operating income (loss) $90,000 (40,000) $50,000 OA. Operating income will increase $6,000. OB. Operating income will increase $18,000. OC. Operating income will increase $24,000. OD. Operating income will decrease $18,000. (15,000) $35,000 (15,000) $40,000 F $30,000 (12,000) $18,000 (24,000) $(6,000) The company is deciding whether to drop product line F because it has an operating loss. Assuming fixed costs are unavoidable, if Motion drops product line F and does not replace it, what effect will this have on operating income?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Motion Rollerblades has three product lines-D, E, and F. The following information is available:
D
E
$60,000
$90,000
(40,000)
(5,000)
$50,000
$55,000
(15,000)
$40,000
Sales revenue
Variable costs
Contribution margin
Fixed costs
Operating income (loss)
O A. Operating income will increase $6,000.
B. Operating income will increase $18,000.
(15,000)
$35,000
C. Operating income will increase $24,000.
OD. Operating income will decrease $18,000.
F
$30,000
(12,000)
$18,000
The company is deciding whether to drop product line F because it has an operating loss. Assuming fixed costs are unavoidable, if Motion
drops product line F and does not replace it, what effect will this have on operating income?
(24,000)
$(6,000)
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