Mary\'s Helmers has two product lines-baseball and football helmets. Income statement data is as follows:
TOTAL BBALL HEL FBALL HEL
SALES REVENUE $850,000. $500,000. $350,000.
VARIABLE EXPENSES (530,000) (250,000) (280,000)
CONTRIBUTION MARGIN $320,000 $250,000 $70,000
FIXED EXPENSES (180,000) (90,000) $90,000)
OPERATING INCOME(LOSS) $140,000) $160,000 $(20,000)
Assuming the football helmet line is dropped, total fixed costs remain unchanged, and the space formerly used to produce the line uis used to double the productionof baseball helmets, operating income would be;
A. $410,000 $320,000 $150,000 $250,000
Solution
Op Income will change by (70000) lost CM + $250000 extra CM from BH = $ 180000
Op income increase by 180000
so 140000+180000 = 320000
.
Mary-'s Helmers has two product lines-baseball and football helmets- I.docx
1. Mary's Helmers has two product lines-baseball and football helmets. Income statement
data is as follows:
TOTAL BBALL HEL FBALL HEL
SALES REVENUE $850,000. $500,000. $350,000.
VARIABLE EXPENSES (530,000) (250,000) (280,000)
CONTRIBUTION MARGIN $320,000 $250,000 $70,000
FIXED EXPENSES (180,000) (90,000) $90,000)
OPERATING INCOME(LOSS) $140,000) $160,000 $(20,000)
Assuming the football helmet line is dropped, total fixed costs remain unchanged, and the
space formerly used to produce the line uis used to double the productionof baseball
helmets, operating income would be;
A. $410,000 $320,000 $150,000 $250,000
Solution
Op Income will change by (70000) lost CM + $250000 extra CM from BH = $ 180000
Op income increase by 180000
so 140000+180000 = 320000
