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Sports Hats, Etc. Has two product lines Baseball Helmets and Football Helmets. Income statement data for...

Sports Hats, Etc. Has two product lines Baseball Helmets and Football Helmets. Income statement data for the most recent period
Sales Revenue
Total $60,000
Baseball Helmets $310,000
Football Helmets $150,000

Variable Expenses
Total. $355,000
Baseball Helmets. $235,000
Football Helmets. $120,000

Contribution Margin
Total. $105,000
Baseball Helmets. $75,000
Football Helmets. 30,000

Fixed Expenses
Total. $76,000
Baseball Helmets. $38,000
Football Helmets. $38,000

Operating Income (loss)
Total. $29,000
Baseball Helmets. $37,000
Football Helmets. $($8,000)

Assuming fixed costs remain unchanged how would dropping Football Helmets affect operating costs?

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Expert Solution

Baseball Helmets Football Helmets Total
Sales Revenue $        310,000 $                 -   $       310,000
Less: variable Exp. $        235,000 $                 -   $       235,000
Contribution Margin $          75,000 $                 -   $         75,000
Less: Fixed Exp. $          38,000 $        38,000 $         76,000
Net Income $          37,000 $      (38,000) $         (1,000)
After dropping Football Helmets total Operatuing income of $29000 has been changed into operating loss of $1000

ekkarill92 answered 1 year ago
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