Contribution Margin Income Statement Data for the Most Recent Year

question 67

Multiple Choice

Contribution margin income statement data for the most recent year follow: $$\begin{array} { | l | r | r | r | } \hline & \text { Total } & \text { Adult jackets } & \text { Children's jackets } \\\hline \text { Sales revenue } & \$ 365,000 & \$ 275,000 & \$ 90,000 \\\hline \text { Variable expenses } & \$ 205,000 & \$ 165,000 & \$ 40,000 \\\hline \text { Contribution margan } & \$ 160,000 & \$ 110,000 & \$ 50,000 \\\hline \text { Fixed expenses } & \$ 102,000 & \$ 50,000 & \$ 52,000 \\\hline \text { Operating incame (loss) } & \$ 58,000 & \$ 60,000 & \$ ( 2,000 ) \\\hline\end{array}$$
- Assuming the children's jackets line is dropped,total fixed costs remain unchanged,and the space formerly used to produce the children's jackets line is used to double the production of adult jackets,how will operating income be affected?

• A)Increase $176,000
• B)Increase $60,000
• C)Increase $118,000
• D)Decrease $60,000

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Definitions:

Damages

The monetary compensation awarded to a person as a result of a lawsuit or legal claim for harm or injury.

Extortion

The practice of obtaining something, especially money, through force or threats.

Rescind Agreement

To legally cancel or revoke an agreement, usually due to issues such as fraud, mistake, or breach of contract.

Economic Interests

Economic interests refer to the financial stakes or concerns that individuals, companies, or countries have in the outcome of a specific transaction, policy, or economic activity.