Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Oakville Cycle sells a variety of bicycles: Mountain, Road, and Leisure bikes. Sales of the Leisure Bikes have fallen off. The following information is available:

Oakville Cycle sells a variety of bicycles: Mountain, Road, and Leisure bikes. Sales of the Leisure Bikes have fallen off.

The following information is available:

Mountain Road Leisure
Sales revenue $225,000 $975,000 $200,000
Variable costs $112,500 $600,000 $175,000
Fixed costs $50,000 $210,000 $30,000
Operating income $62,500 $165,000 -$5,000

If the Leisure Bike line is dropped, the $30,000 fixed cost is avoidable.

Calculate the impact on operating income if the Leisure Bike line is dropped and answer the following questions.

If the Leisure Bike line is dropped, operating income would ________________.

Input the word INCR for increase or DECR for decrease.

by $______________________.

Indicate the dollar amount of the increase or decrease.

Input your answer as a positive number.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Students also viewed these Accounting questions