Question
CrashSports, Inc. has two product lineslong dash batting helmets and football helmets. The income statement data for the most recent year is asfollows: Total Batting
CrashSports, Inc. has two product lineslong dash
batting helmets and football helmets. The income statement data for the most recent year is asfollows:
Total
Batting Helmets
Football Helmets
Sales revenue
$ 900 comma 000
$900,000
$ 500 comma 000
$500,000
$ 400 comma 000
$400,000
Variable costs
(430 comma 000
430,000)
(150 comma 000
150,000)
(280 comma 000
280,000)
Contribution margin
$ 470 comma 000
$470,000
$ 350 comma 000
$350,000
$ 120 comma 000
$120,000
Fixed costs
(240 comma 000
240,000)
(90 comma 000
90,000)
(150 comma 000
150,000)
Operating income(loss)
$ 230 comma 000
$230,000
$ 260 comma 000
$260,000
$(30 comma 000
30,000)
If $ 90 comma 000
$90,000 of fixed costs will be eliminated by dropping the football helmetsline, how will dropping football helmets affect operating income of thecompany?
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