The following summarized data are shown in the projected income statement of All Sports Inc. for two of its product lines – Cricket helmets and Baseball helmets: Summarized Data Name of the product lines Cricket helmets Baseball helmets Total Sales 610,000 1,100,000 1,710,000 Variable costs (520,000) (630,000) (1,150,000) Contribution margin 90,000 470,000 560,000 Fixed costs (140,000) (180,000) (320,000) Income (loss) (50,000) 290,000 240,000 Management is considering the dropping the production and sale of Cricket helmets. Assume that $30,000 of fixed costs would be saved by dropping the Cricket helmets. Further assume that dropping the Cricket helmets would not impact the sale of the Baseball helmets. What would be the effect of dropping Cricket helmets line on the operating income of the company? Group of answer choices The operating income would decrease by $60,000 The operating income would increase by $560,000 The operating income would decrease by $610,000 The operating income would increase by $90,000
The following summarized data are shown in the projected income statement of All Sports Inc. for two of its product lines – Cricket helmets and Baseball helmets: Summarized Data Name of the product lines Cricket helmets Baseball helmets Total Sales 610,000 1,100,000 1,710,000 Variable costs (520,000) (630,000) (1,150,000) Contribution margin 90,000 470,000 560,000 Fixed costs (140,000) (180,000) (320,000) Income (loss) (50,000) 290,000 240,000 Management is considering the dropping the production and sale of Cricket helmets. Assume that $30,000 of fixed costs would be saved by dropping the Cricket helmets. Further assume that dropping the Cricket helmets would not impact the sale of the Baseball helmets. What would be the effect of dropping Cricket helmets line on the operating income of the company? Group of answer choices The operating income would decrease by $60,000 The operating income would increase by $560,000 The operating income would decrease by $610,000 The operating income would increase by $90,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
The following summarized data are shown in the
| Name of the product lines | Cricket helmets | Baseball helmets | Total |
|---|---|---|---|
| Sales | 610,000 | 1,100,000 | 1,710,000 |
| Variable costs | (520,000) | (630,000) | (1,150,000) |
| Contribution margin | 90,000 | 470,000 | 560,000 |
| Fixed costs | (140,000) | (180,000) | (320,000) |
| Income (loss) | (50,000) | 290,000 | 240,000 |
Management is considering the dropping the production and sale of Cricket helmets. Assume that $30,000 of fixed costs would be saved by dropping the Cricket helmets. Further assume that dropping the Cricket helmets would not impact the sale of the Baseball helmets. What would be the effect of dropping Cricket helmets line on the operating income of the company?
Group of answer choices
The operating income would decrease by $60,000
The operating income would increase by $560,000
The operating income would decrease by $610,000
The operating income would increase by $90,000
AI-Generated Solution
AI-generated content may present inaccurate or offensive content that does not represent bartleby’s views.
Unlock instant AI solutions
Tap the button
to generate a solution
Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education