Faros Hats, Etc Assuming the Football Helmet Line Is Dropped, Total Fixed Costs

question 101

Multiple Choice

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

• A) $250,000.
• B) $180,000.
• C) $320,000.
• D) $410,000.

Know the rights and responsibilities when dealing with debt collectors.

Identify danger signals of potential debt problems and know how to address them.

Knowledge of organizations that provide debt counseling and their funding sources.

Understand the process and consequences of contacting creditors about payment issues.

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