uct lines: baseball helmets and football helmets. Income statement follow: 3. Sp

Question

uct lines: baseball helmets and football helmets. Income statement follow: 3. Sports Hats, Etc. has two data for the most recent year Total $460,000 105,000 Baseball Helmets $310,000 Football Helmets $150,000 235,000 20,000 Sales revenue Variable expenses Contribution margin 30,000 75,000 38,000 38,000 Fixed expenses S (8,000) S 37000 . Assumin income? 6 points gfixed costs remain unchanged how would dropping the Football Helmets line affect operating Discontinue Differo nce sales 50,000 /20 90000 130)000 30 / 00

Explanation / Answer

Current Total Total without Football helmets Difference Sales 460000 310000 -150000 Variable expenses 355000 235000 120000 Contribution mrgin 105000 75000 -30000 Fixed expenses 76000 76000 0 Operating income(loss) 29000 -1000 -30000 Operating income will decrease by $30000 if Football helmets line is discontinued

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