Pottery Unlimited has two product lines: cups and pitchers. Income statement data for the most recent year follow: Total Cups Pitchers Sales revenue $460,000 $310,000 $150,000 Variable expenses 355,000 235,000 120,000 Contribution margin 105,000 75,000 30,000 Fixed expenses 76,000 38,000 38,000 Operating income (loss) $29,000 $37,000 $(8,000) If $29,679 in fixed costs will be eliminated by dropping the Pitcher line, how will operating income be affected? If income drops, use a negative sign in front of the number.
Pottery Unlimited has two product lines: cups and pitchers. Income statement data for the most recent year follow: Total Cups Pitchers Sales revenue $460,000 $310,000 $150,000 Variable expenses 355,000 235,000 120,000 Contribution margin 105,000 75,000 30,000 Fixed expenses 76,000 38,000 38,000 Operating income (loss) $29,000 $37,000 $(8,000) If $29,679 in fixed costs will be eliminated by dropping the Pitcher line, how will operating income be affected? If income drops, use a negative sign in front of the number.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Pottery Unlimited has two product lines: cups and pitchers. Income statement data for the most recent year follow:
|
|
Total |
Cups |
Pitchers |
|
Sales revenue |
$460,000 |
$310,000 |
$150,000 |
|
Variable expenses |
355,000 |
235,000 |
120,000 |
|
Contribution margin |
105,000 |
75,000 |
30,000 |
|
Fixed expenses |
76,000 |
38,000 |
38,000 |
|
Operating income (loss) |
$29,000 |
$37,000 |
$(8,000) |
If $29,679 in fixed costs will be eliminated by dropping the Pitcher line, how will operating income be affected? If income drops, use a negative sign in front of the number.
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