Question
Sports Hats, Etc. has two product lines-baseball helmets and football helmets. Income statement data for the most recent year follow: Total Baseball Helmets Football Helmets
Sports Hats, Etc. has two product lines-baseball helmets and football helmets. Income statement data for the most recent year follow:
| Total | Baseball Helmets | Football Helmets |
Sales revenue | $460,000 | $310,000 | $150,000 |
Variable expenses | 355,000 | 235,000 | 120,000 |
Contribution margin | 105,000 | 75,000 | 30,000 |
Fixed expenses | 76,000 | 38,000 | 38,000 |
Operating income (loss) | $29,000 | $37,000 | $(8,000) |
Assuming fixed costs remain unchanged, and that there would be no adverse effect on other sales, how would dropping the Football Helmets line affect operating income?
Group of answer choices
Operating income will increase $8,000.
Operating income will decrease $150,000.
Operating income will decrease $30,000.
Operating income will increase $38,000.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started