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FarosHats, Etc. has two product linesbaseball helmets and football helmets. Income statement data for the most recent yearfollow: Total Baseball Helmets Football Helmets Sales revenue
FarosHats, Etc. has two product linesbaseball helmets and football helmets. Income statement data for the most recent yearfollow:
Total | Baseball Helmets | Football Helmets | |
Sales revenue | $850,000 | $500,000 | $350,000 |
Variable expenses | (530,000) | (250,000) | (280,000) |
Contribution margin | $320,000 | $250,000 | $70,000 |
Fixed expenses | (180,000) | (90,000) | (90,000) |
Operating income(loss) | $140,000 | $160,000 | $(20,000) |
Assuming the Football Helmet line isdropped, total fixed costs remainunchanged, and the space formerly used to produce the Football Helmet line is used to double the production of BaseballHelmets, operating income willbe:
A. $410,000
B. $320,000
C. $180,000
D. $250,000
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