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The income statement for Lovely Locks is divided by its two product lines, Curling Irons and Straighteners, as follows: Curling Irons Straighteners Total Sales revenue
The income statement for Lovely Locks is divided by its two product lines, Curling Irons and Straighteners, as follows: Curling Irons Straighteners Total Sales revenue $600,000 $260,000 $860,000 Variable expenses $450,000 $210,000 $660,000 Contribution margin $150,000 $50,000 $200.000 Fixed expenses $95,000 $95,000 $190,000 Operating income (loss) $55.000 ($45,000 $10,000 If Lovely Locks can eliminate fixed costs of $35,000 by discontinuing the Straightener line, then discontinuing it should result in which of the following? O A. Decrease in total operating income of $15,000 OB. Increase in total operating income of $15,000 O C. Decrease in total operating income of $10,000 O D. Increase in total operating income of $10,000 Cruise Company produces a part that is used in the manufacture of one of its products. The unit manufacturing costs of this part, assuming a production level of 6, 100 units, are as follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Total cost The fixed overhead costs are unavoidable. $4.00 $4.50 $3.20 $1.50 $13.20 Suri Company has offered to sell 6,100 units of the same part to Cruise Company for $14.40 per unit. Assuming the company has no other use for its facilities, what should Cruise Company do? O A. Make the part and save $2.70 per unit. OB. Make the part and save $10.20 per unit. O C. Make the part and save $5.70 per unit. OD. Buy from Suri and save $1.20 per unit
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