Pottery Unlimited has two product lines: cups and pitchers. Income statement data for the most recent year follow:
Operating income (loss)
If $24023 in fixed costs will be eliminated by dropping the CUP line, how will operating income be affected? If income drops, use a negative sign in front of the number.
Income statement(After Dropping cup line)
Sales revenue $150,000
Variable expenses 120,000
Contribution margin $30,000
Fixed expenses($76,000 - $24,023) 51,977
Operating income (loss) $(21,977)
Operating income will be decreased from $29,000 to operating loss $(21,977).
operating loss $(21,977) consists of
Difference of Fixed Expenses by dropping Cup line($38,000 - $24,023) $(13,977)
Operating loss from sale of Pitchers ( 8,000)
Total operating loss by dropping Cup line $ (21,977)
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