29. All About Animals has two product lines: Cat food and Dog food. Contribution

Question

29. All About Animals has two product lines: Cat food and Dog food. Contribution margin income statement data for the most recent year follow: Total Sales revenue Variable expenses Contribution margin Fixed expenses Operating income (loss) Cat FoodDog Food $85,000 $48,000 $37,000 $50,000 $52,000 $385,000 $300,000 $160,000 $140,000 $208.000 $160.000 548.000 $177,000 $102,000$ $75,000 $9000 (315.000 ($15,000) Assuming the Dog food line is discontinued, total fixed costs remain unchanged, and the space formerly used to produce the Dog food line is used to double the production of Cat food, how will operating income be affected? C A-Decrease $103,000 B.Increase $280,000 C.Increase $140,000 DJncrease $103,000

Explanation / Answer

Loss in contribution margin of Dog food -37000 Additional contribution margin from Cat food 140000 Change in income 103000 Option D increase if $103000 is correct

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