Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Office Supplies Computer Total Sales $250,000 $310,000 $560,000 Less: Variable expenses 100,000 252.000 352.000 Contribution margin 150,000 58,000 208,000 Less: Fixed expenses 70,000 100,000 170,000

image text in transcribed
Office Supplies Computer Total Sales $250,000 $310,000 $560,000 Less: Variable expenses 100,000 252.000 352.000 Contribution margin 150,000 58,000 208,000 Less: Fixed expenses 70,000 100,000 170,000 Operating income $80.000 $38,000 (542.000) Additional information: Management estimates that the dropping of the Computer product line would result in a 10% decrease in sales in the Office Supplies product line Even if the Computer product line is dropped, 80% of the Computer product line's fixed expenses will be eliminated Since the Computer product line incurred a loss, the company is considering dropping the product line. If the Computer product line is dropped, the company's total income will: O A decrease by $73,000 B. increase by $7.000 o increase by $42.000 D. increase by $22.000 SAAT Se

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

Recommended Textbook for

Derivatives Markets

Authors: Rober L. Macdonald

4th edition

321543084, 978-0321543080

Students also viewed these Accounting questions