Faros Hats, Etc If $50,000 of Fixed Costs Will Be Eliminated by Dropping

question 10

Multiple Choice

Faros Hats, Etc. has two product lines-baseball helmets and football helmets. Income statement data for the most recent year follow: $$\begin{array} { | l | r | r | r | } \hline & { \text { Total } } & \text { Baseball Helmets } & \text { Football Helmets } \\\hline \text { Sales revenue } & \$ 850,000 & \$ 500,000 & \$ 350,000 \\\hline \text { Variable expenses } & ( 530,000 ) & ( 250,000 ) & ( 280,000 ) \\\hline \text { Contribution margin } & \$ 320,000 & \$ 250,000 & \$ 70,000 \\\text { Fixed expenses } & ( 180,000 ) & ( 90,000 ) & ( 90,000 ) \\\hline \text { Operating income (loss) } & \$ 140,000 & \$ 160,000 & \$ ( 20,000 \\\hline\end{array}$$ If $50,000 of fixed costs will be eliminated by dropping the Football Helmets line, how will dropping Football Helmets affect the operating income of the company?

• A) Operating income will increase by $50,000.
• B) Operating income will increase by $70,000.
• C) Operating income will decrease by $90,000.
• D) Operating income will decrease by $20,000.

Identify and apply the correct factorial ANOVA design based on research conditions.

Understand and identify the main and interaction effects in factorial ANOVA.

Distinguish between dependent and independent variables in given research scenarios.

Understand the hypothesis formulation for both main and interaction effects in factorial ANOVA.

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