Question
Holy Shirts and Pants Co. makes two products, shirts and pants. Their sales information is below. Total Shirts Pants Sales revenue $1,200,000 $850,000 $350,000 Variable
Holy Shirts and Pants Co. makes two products, shirts and pants. Their sales information is below.
Total
Shirts
Pants
Sales revenue
$1,200,000
$850,000
$350,000
Variable expenses
950,000
720,000
230,000
Contribution margin
250,000
130,000
120,000
Fixed expenses
250,000
125,000
125,000
Operating income(loss)
$0
$5,000
$(5,000)
The company is considering closing the pants line, saving $115,000 in fixed expenses. What impact would this have on operating income?
Group of answer choices
Decrease $5,000
Increase $10,000
Increase $5,000
Increase $5,000
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Managerial Accounting Tools For Business Decision Making
Authors: Jerry J. Weygandt, Paul D. Kimmel, Jill E. Mitchell
9th Edition
111970958X, 9781119709589
