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Michael's Hats, Inc. has two product linesabatting helmets and football helmets. The income statement data for the most recent year is as follows: Total Batting
Michael's Hats, Inc. has two product linesabatting helmets and football helmets. The income statement data for the most recent year is as follows: Total Batting Helmets Football Helmets Sales revenue $900,000 $500,000 $400,000 Variable costs (480,000) (200,000) (280,000) Contribution margin $420,000 $300,000 $120,000 Fixed costs (230,000) (80,000) (150,000) Operating income (loss) $190.000 $220,000 $(30,000) If $90,000 of fixed costs will be eliminated by dropping the football helmets line. how will dropping football helmets affect operating income of the company? Select one: A. Operating income will decrease by $150,000. B. Operating income will decrease by $30,000. C. Operating income will increase by $120,000. D. Operating income will increase by $90,000. E. None of the above
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