Pet Food Inc. has two product lines: Cat food and Dog food. Contribution margin income statement data for the most recent year follow. Total Dog Food Sales revenue $385,000 $85,000 $62,000 $40,000 $323,000 $45,000 Variable expenses Contribution margin Fixed expenses Operating income (loss) $100,000 $52,000 $223,000 $(7,000) Assuming total fixed costs remain unchanged, how would discontinuing the Dog food line affect operating income? OA. Increase in total operating income of $7,000 OB. Decrease in total operating income of $45,000 OC. Increase in total operating income of $178,000 OD. Decrease in total operating income of $401,000 Cat Food $300,000 $22,000 $278,000 $48,000 $230,000 CUD
Pet Food Inc. has two product lines: Cat food and Dog food. Contribution margin income statement data for the most recent year follow. Total Dog Food Sales revenue $385,000 $85,000 $62,000 $40,000 $323,000 $45,000 Variable expenses Contribution margin Fixed expenses Operating income (loss) $100,000 $52,000 $223,000 $(7,000) Assuming total fixed costs remain unchanged, how would discontinuing the Dog food line affect operating income? OA. Increase in total operating income of $7,000 OB. Decrease in total operating income of $45,000 OC. Increase in total operating income of $178,000 OD. Decrease in total operating income of $401,000 Cat Food $300,000 $22,000 $278,000 $48,000 $230,000 CUD
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Pet Food Inc. has two product lines: Cat food and Dog food. Contribution margin income statement data for the most recent year follow.
Total
$385,000
Dog Food
$85,000
$62,000
$40,000
$323,000
$100,000
$223,000
Cat Food
$300,000
$22,000
Sales revenue
Variable expenses
Contribution margin
Fixed expenses
$45,000
$52,000
Operating income (loss)
$(7,000)
Assuming total fixed costs remain unchanged, how would discontinuing the Dog food line affect operating income?
OA. Increase in total operating income of $7,000
OB. Decrease in total operating income of $45,000
OC. Increase in total operating income of $178,000
D. Decrease in total operating income of $401,000
$278,000
$48,000
$230,000
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