Protector, Inc. has two product lines-batting helmets and football helmets. The income statement data for the most recent year is as follows: Sales revenue Variable costs E Contribution margin Fixed costs Operating income (loss) Total $840,000 (550,000) $290,000 OA. Operating income will decrease by $40,000. OB. Operating income will increase by $60,000. C. Operating income will decrease by $60,000. OD. Operating income will increase by $40,000. (182,000) $108,000 Batting Helmets $500,000 (250,000) $250,000 (...) (90,000) $160,000 Football Helmets $340,000 (300,000) $40,000 Assuming the football helmets line is dropped, total fixed costs remain unchanged, and the space formerly used to produce the line is rented for $100,000 per year, how will operating income be affected? (92,000) $(52,000)

Protector, Inc. has two product lines-batting helmets and football helmets. The income statement data for the most recent year is as follows: Sales revenue Variable costs E Contribution margin Fixed costs Operating income (loss) Total $840,000 (550,000) $290,000 OA. Operating income will decrease by $40,000. OB. Operating income will increase by $60,000. C. Operating income will decrease by $60,000. OD. Operating income will increase by $40,000. (182,000) $108,000 Batting Helmets $500,000 (250,000) $250,000 (...) (90,000) $160,000 Football Helmets $340,000 (300,000) $40,000 Assuming the football helmets line is dropped, total fixed costs remain unchanged, and the space formerly used to produce the line is rented for $100,000 per year, how will operating income be affected? (92,000) $(52,000)

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter8: Tactical Decision-making And Relevant Analysis

Section: Chapter Questions

Problem 11MCQ: Garrett Company provided the following information: Common fixed cost totaled 46,000. Garrett...

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Garrett Company provided the following information: Common fixed cost totaled 46,000. Garrett allocates common fixed cost to Product 1 and Product 2 on the basis of sales. If Product 2 is dropped, which of the following is true? a. Sales will increase by 300,000. b. Overall operating income will increase by 2,600. c. Overall operating income will decrease by 25,000. d. Overall operating income will not change. e. Common fixed cost will decrease by 27,600.
Armor Sports, Inc. has two product lines-batting helmets and football helmets. The income statement data for the most recent year is as follows: Sales revenue Variable costs Contribution margin Fixed costs Operating income (loss) Total $940,000 (540,000) $400,000 (200,000) $200,000 Batting Helmets $600,000 (250,000) $350,000 OA. Operating income will increase by $60,000. OB. Operating income will increase by $90,000. OC. Operating income will decrease by $340,000. D. Operating income will decrease by $50,000. (90,000) $260,000 Football Helmets $340,000 (290,000) $50,000 (110,000) $(60,000) What is the effect of dropping football helmets line on the operating income of the company? (Assume that fixed costs remain unchanged and that there would be no adverse effect on other sales.)
Har
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The Biscuits Crunch Company had the following information available regarding last year's operations: Sales (100,000 units) Variable costs Contribution margin Fixed costs Net Income $200,000 100,000 100,000 50,000 50,000 If sales were to increase by 200 units, what would be the effect on net income? A) 400 increase B) 200 increase C) 100 increase D) 200 loss E) 150 increase
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