Question
In: Accounting
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?
Solutions
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 | |||
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