Faros Hats, Etc

question 98

Multiple Choice

Faros Hats, Etc. has two product lines-baseball helmets and football helmets. Income statement data for the most recent year follow: Assuming the Football Helmets line is dropped, total fixed costs remain unchanged, and the space formerly used to produce the line is rented for $100,000 per year, how will operating income be affected?

• A)Operating income will increase $30,000.
• B)Operating income will increase $10,000.
• C)Operating income will decrease $10,000.
• D)Operating income will decrease $80,000.

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Definitions:

Inferior Quality

A term used to describe goods or services that do not meet expected standards or specifications.

Slander

The act of making false and damaging statements about someone, orally, that harm their reputation.

Financial Position

An overview of the assets, liabilities, and equity of an entity at a specific point in time, reflecting its economic resources and obligations.