Pottery Unlimited Has Two Product Lines: Cups and Pitchers

question 185

Multiple Choice

Pottery Unlimited has two product lines: cups and pitchers.Income statement data for the most recent year follow:
- Assuming fixed costs remain unchanged,how would dropping the Pitcher line affect operating income?

• A)Decrease in total operating income of $30,000
• B)Increase in total operating income of $122,000
• C)Decrease in total operating income of $28,000
• D)Decrease in total operating income of $1,000

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Definitions:

Bad Check

A check that cannot be processed because the account on which it is drawn does not have sufficient funds.

Seller Transfers

The act of a seller handing over the rights, responsibilities, and ownership of products or property to the buyer.

Merchant

An individual or company engaged in the business of selling goods or services in the marketplace.

Ordinary Course of Business

Regular and routine operations of a company, including transactions and activities that are normal for the business.