7.3

Question 3 of 12 -15 E View Policies Current Attempt in Progress Wildhorse Equipment sells equipment to sports enthusiasts. Doug Wildhorse, the company's president, just received the following income statement reporting the results of the past year. Baseball Soccer Basketball Total Sales revenue $1.230.000 $3.540.000 $2,332,000 $7,102,000 Variable cost of goods sold 835,000 2,301,000 1,873,600 5,009,600 Fixed cost of goods sold 113,000 184.200 162,400 459.600 Gross profit 282,000 1,054.800 296.000 1,632,800 Variable operating expenses 167.000 566.400 233.200 966.600 Fixed operating expenses 78,000 82.600 71,700 232,300 Common fixed costs 59.000 127.000 95.300 281,300 Operating income ($22,000) $278,800 ($104,200) $152,600 Doug is concerned that two of the company's divisions are showing a loss, and he wonders if the company should stop selling baseball and basketball gear to concentrate solely on soccer gear.