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Ivanhoelndustries manufactures light fixtures for home, retail, and industrial customers. The retail line has been showing losses for several years, and management is considering dropping
Ivanhoelndustries 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 $551500 $321500 $831500 $1704500 Variable costs 359300 219300 681800 1260400 192200 102200 149700 444100 Contribution margin Fixed costs 126500 131500 116500 374500 Operating income $65700 $(29300) $33200 $69600 Of the fixed costs, $319500 of it is common costs that have been allocated equally to each product line. What will total operating income be if Ivanhoe drops the retail line? O $98900 O $22400 O $77200 O $(7600)
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