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Sports Hats, Etc. has two product lines-baseball helmets and football helmets. Income statement data for the most recent year follow: Sales revenue Variable expenses Contribution margin Fixed expenses Total $460,000 $310,000 355,000 105,000 76,000 Baseball Helmets Football Helmets Operating income (loss) $29,000 235,000 75,000 38,000 $37,000 $150,000 120,000 30,000 38,000 $(8,000) Assuming fixed costs remain unchanged, and that there would be no adverse effect on other sales, how would dropping the Football Helmets

Sports Hats, Etc. has two product lines-baseball helmets and football helmets. Income statement data for the most recent year follow: Sales revenue Variable expenses Contribution margin Fixed expenses Total $460,000 $310,000 355,000 105,000 76,000 Baseball Helmets Football Helmets Operating income (loss) $29,000 235,000 75,000 38,000 $37,000 $150,000 120,000 30,000 38,000 $(8,000) Assuming fixed costs remain unchanged, and that there would be no adverse effect on other sales, how would dropping the Football Helmets

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Sports Hats, Etc. has two product lines-baseball helmets and football helmets. Income statement data for the most recent year follow: Sales revenue Variable expenses Contribution margin Fixed expenses Total $460,000 $310,000 355,000 105,000 76,000 Baseball Helmets Football Helmets Operating income (loss) $29,000 235,000 75,000 38,000 $37,000 $150,000 120,000 30,000 38,000 $(8,000) Assuming fixed costs remain unchanged, and that there would be no adverse effect on other sales, how would dropping the Football Helmets line affect operating income? Group of answer choices Operating income will increase $8,000. Operating income will decrease $150,000. Operating income will decrease $30,000. Operating income will increase $38,000.
Transcribed Image Text:Sports Hats, Etc. has two product lines-baseball helmets and football helmets. Income statement data for the most recent year follow: Sales revenue Variable expenses Contribution margin Fixed expenses Total $460,000 $310,000 355,000 105,000 76,000 Baseball Helmets Football Helmets Operating income (loss) $29,000 235,000 75,000 38,000 $37,000 $150,000 120,000 30,000 38,000 $(8,000) Assuming fixed costs remain unchanged, and that there would be no adverse effect on other sales, how would dropping the Football Helmets line affect operating income? Group of answer choices Operating income will increase $8,000. Operating income will decrease $150,000. Operating income will decrease $30,000. Operating income will increase $38,000.
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