Question
Carla VistaIndustries manufactures light fixtures for home, retail, and industrial customers. The retail line has been showing losses for several years, and management is considering
Carla VistaIndustries manufactures light fixtures for home, retail, and industrial customers. The retail line has been showing losses for several years, and management is considering dropping the line. Recent income statements have been very similar to the following information which was prepared for the most recent year:
Home | Retail | Industrial | Total | |
---|---|---|---|---|
Sales | $550900 | $320900 | $830900 | $1702700 |
Variable costs | 358500 | 218100 | 681100 | 1257700 |
Contribution margin | 192400 | 102800 | 149800 | 445000 |
Fixed costs | 125900 | 130900 | 115900 | 372700 |
Operating income | $66500 | $(28100) | $33900 | $72300 |
Of the fixed costs, $317700 of it is common costs that have been allocated equally to each product line. What will total operating income be if Carla Vista drops the retail line?
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