Question
Seven Company produces a model fan, which currently has a net loss. Below are its sales and costs Sales revenue $101,740 Less: Variable costs 64,930
Seven Company produces a model fan, which currently has a net loss. Below are its sales and costs
Sales revenue | $101,740 | |
Less: Variable costs | 64,930 | |
Contribution margin | $? | |
Less: Direct fixed costs | 57,394 | |
Segment margin | $? | |
Less: Common fixed costs | 53,226 | |
Net operating income (loss) | $? |
Eliminating the model fan product line would eliminate all of direct fixed costs. All of the common fixed costs would be redistributed to Seven's remaining product lines. By how much will Popes net operating income increase or decrease if the fan is eliminated? If net income decreases, indicate with a -. Example, if net income decreases $1,000. Indicate -1,000.
(please show steps on how to answer this question, and notes. Thats way I can answer similar problems) Please and thanks!
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