Question
The income statement for Germain Appliances is divided by its two product lines, Toasters and Microwaves, as follows: Toaster Microwave Total Sales Revenue $620,000 $255,000
The income statement for Germain Appliances is divided by its two product lines, Toasters and Microwaves, as follows:
Toaster Microwave Total
Sales Revenue $620,000 $255,000 $875,000
Variable Expenses $440,000 $210,000 $650,000
Contribution Margin $180,000 $45,000 $225,000
Fixed Expenses $75,000 $75,000 $150,000
Operating income (loss) $105,000 ($30,000) $75,000
If Germain Appliances can eliminate fixed costs of $34,000 and increase the sale of Toasters by 6300 units at a selling price of $30 per unit and a contribution margin of $12 per unit, then discontinuing the Microwaves should result in what difference in total operating income?
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