Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

All About Animals has two product lines: Cat food and Dog food. Contribution margin income statement data for the most recent year follow: Total Cat

All About Animals has two product lines: Cat food and Dog food. Contribution margin income statement data for the most recent year follow:

Total

Cat Food

Dog Food

Sales revenue

$415,000

$330,000

$85,000

Variable expenses

$64,000

$24,000

$40,000

Contribution margin

$351,000

$306,000

$45,000

Fixed expenses

$98,000

$46,000

$52,000

Operating income (loss)

$253,000

$260,000

$(7,000)

Assuming total fixed costs remain unchanged, how would discontinuing the Dog food line affect operating income?

A.

Decrease in total operating income of $45,000

B.

Increase in total operating income of $208,000

C.

Increase in total operating income of $7,000

D.

Decrease in total operating income of $461,000

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Auditing Fundamentals In A South African Context

Authors: Gerrit Penning, Rika Butler, Pieter Von Wielligh, Frans Prinsloo

2nd Edition

0190749040, 978-0190749040

More Books

Students also viewed these Accounting questions