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Oneco Industries manufactures two products: Works and Best. The results of operations for 20x1 follow. O 003211 Unita Sales revenue Lens: Cont of goods sold
Oneco Industries manufactures two products: Works and Best. The results of operations for 20x1 follow. O 003211 Unita Sales revenue Lens: Cont of goods sold Gross Margin Less: Selling expenses Operating Income (los) Works Best Total 10,000 4,100 14,100 $250,000 $943,000 $1,193,000 200,000 574,000 774,000 $ 50,000 $369,000 $ 419,000 50,000 226,000 276,000 $ 0 $143,000 $ 143,000 Fixed manufacturing costs included in cost of goods sold amount to $2 per unit for Works and $20 per unit for Best. Variable selling expenses are $3 per unit for Works and $20 per unit for Best; remaining selling amounts are fixed. Oneco Industries wants to drop the Works product line. If the line is dropped, company-wide fixed manufacturing costs would fall by 20% because there is no alternative use of the facilities. What would be the impact on operating income if Works is discontinued? Multiple Choice $20,000 increase $20,400 increase $0 O $19,600 decrease. None of the answers is correct
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