Contribution margin income statement data for the most recent year follow Sales

Question

Contribution margin income statement data for the most recent year follow Sales revenue Variable expenses Contribution margin Fixed expenses Operating income (loss) Total $385,000 $205,000 $180,000 $102,000 $78,000 Cat Food $300,000 $165,000 $135,000 $50,000 $85,000 Dog Food $85,000 $40,000 $45,000 $52,000 $(7,000) 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? O A. Increase $135,000 B. Increase $270,000 O C. Increase $90,000 D. Decrease $90,000

Explanation / Answer

Effect of operating income :

so answer is c) Increase $90,000

Sales 600000 Less: Variable cost (330000) Less Fixed cost (102000) Net operating income if dog food line discontinue 168000 Net operating income if dog food line continue (78000) Increase 90000

Related Questions

Navigate

• Browse (All)
• Browse C
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.