How do you solve this question from special decisions in accounting?

User Generated

gngvcc

Business Finance

Description

Pottery Unlimited has two product lines:  cups and pitchers.  Income statement data for the most recent year follow:

 

Total

Cups

Pitchers

Sales revenue

$460,000

$310,000

$150,000

Variable expenses

355,000

235,000

120,000

Contribution margin

105,000

75,000

30,000

Fixed expenses

76,000

38,000

38,000

Operating income (loss)

$29,000

$37,000

$(8,000)

 

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.

User generated content is uploaded by users for the purposes of learning and should be used following Studypool's honor code & terms of service.

This question has not been answered.

Create a free account to get help with this and any other question!

Related Tags