Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

CullumberIndustries manufactures light fixtures for home, retail, and industrial customers. The retail line has been showing losses for several years, and management is considering dropping

CullumberIndustries 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

$552500

$322500

$832500

$1707500

Variable costs

359700

219800

683100

1262600

Contribution margin

192800

102700

149400

444900

Fixed costs

127500

132500

117500

377500

Operating income

$65300

$(29800)

$31900

$67400

Of the fixed costs, $322500 of it is common costs that have been allocated equally to each product line. What will total operating income be if Cullumber drops the retail line?

$(10300)

$19700

$97200

$77700

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

Accounting A Business Perspective

Authors: Roger H. Hermanson, James Don Edwards, Michael W. Maher

7th Edition

0075615851, 978-0075615859

More Books

Students also viewed these Accounting questions