Sports Hats, Etc

question 120

Multiple Choice

Sports Hats, Etc. has two product lines-baseball helmets and football helmets. Income statement data for the most recent year follow: Assuming the Football Helmet line is dropped, total fixed costs remain unchanged, and the space formerly used to produce the Football Helmet line is used to double the production of Baseball Helmets, how will operating income be affected?

• A)Operating income will increase $37,000.
• B)Operating income will increase $45,000.
• C)Operating income will decrease $37,000.
• D)Operating income will decrease $45,000.

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