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Accelerate Rollerblades has three product lines-D. E and F. The following information is available: D Sales revenue $70,000 $40,000 $31.000 Variable costs 120.000 (5.000 (11.000
Accelerate Rollerblades has three product lines-D. E and F. The following information is available: D Sales revenue $70,000 $40,000 $31.000 Variable costs 120.000 (5.000 (11.000 Contribution margin 550,000 $35.000 $20,000 Fixed costs 110.000 .000 Operating income (los) $40.000 320.000 $63000 The company is deciding whether to drop product line because it has an operating loss. Assume that $15.000 of total fixed costs could be eliminated by dropping What effect would this decision have on operating income? Operating income will increase by $35,000 Operating income will decrease by $5000 Operating income will increase by $20,000 Operating income will decrease by $15.000
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