Question
Licuado Juice Company has four product lines: Orange, Tomato, Carrot, and Grape. Shown below is last year's income statement segmented by product line: .........................................................Orange..............Tomato.........Carrot.............Grape sales
Licuado Juice Company has four product lines: Orange, Tomato, Carrot, and Grape. Shown below is last year's income statement segmented by product line:
.........................................................Orange..............Tomato.........Carrot.............Grape
sales | $ 60,000 | $ 32,000 | $ 24,000 | $ 44,000 |
variable expenses | 22800 | 11200 | 12000 | 17600 |
contribution margin | 37,200 | 20,800 | 12,000 | 26,400 |
traceable fixed expenses | 12000 | 8000 | 9000 | 6600 |
segment margin | $ 25,200 | $ 12,800 | $ 3,000 | $ 19,800 |
Net operating income last year for Licuado Juice Company as a whole was $ 24,800
If the Tomato product line would have been dropped at the beginning of last year, how would this have changed the net operating income of Licuado Juice Company as a whole?
a) $ 2,400 increase
b) $ 12,000 decrease
c) $ 5,400 increase
d) $ 12,800 decrease
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