Question
37) is going over my head
36) Sports Hats, Etc. has two product lines-baseball helmets and football helmets. Income statement data for the most recent year follow: Baseball Helmets To Football Helmets $150,000 120,000 Sales revenue Variable expenses Contribution margin Fixed ex $310,000 235,000 75,000 38,000 $460,000 55,000 105,000 .000) Assuming the Football Helmet line is dropped, total fixed costs remain unchanged, and the space formerly used to produce the Football Helmet line is used to double the production of Baseball Helmets, how will operating income be affected? B) Operating income will decrease $37,000. D) Operating income will decrease $45,000. Il increase $45,000 O Operating income will increase $37000. 87) A company has two diferet products that sl s parate markets. Financa daa ae s_ Product APro Total Revenue Variable cost Fixed cost (allocated) Operating income $12,000 ($7,500) ($3,000) $1,500 $8,000 ($8,100) ($1,000) ($1,100) $20,000 ($15,600) ($4,000) $400 Assume that fixed costs are all unavoidable and that dropping one product would not impact sales of the other. If Product B is dropped, what would the impact be on total operating income? A) Increase $1,100 B) Decrease $100 C) Decrease $1,100 D) Increase $100 38) Easy Cook Company manufactures two products: toaster ovens and bread machines. The 386
Explanation / Answer
Calculate impact on total operating income :
so answer is d) increase $100
Operating income if product B continue (1100) Operating income if product B dropped (1000) Net operating income will increase by 100
