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
Chapter2: Building Blocks Of Managerial Accounting
Section: Chapter Questions
Problem 9EA: The cost data for Evencoat Paint for the year 2019 is as follows: Using the high-low method, express...
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
Principles of Accounting Volume 2
Accounting
ISBN:
9781947172609
Author:
OpenStax
Publisher:
OpenStax College
Managerial Accounting
Accounting
ISBN:
9781337912020
Author:
Carl Warren, Ph.d. Cma William B. Tayler
Publisher:
South-Western College Pub
Principles of Accounting Volume 2
Accounting
ISBN:
9781947172609
Author:
OpenStax
Publisher:
OpenStax College
Managerial Accounting
Accounting
ISBN:
9781337912020
Author:
Carl Warren, Ph.d. Cma William B. Tayler
Publisher:
South-Western College Pub