Head Bucket, Inc Assuming the Football Helmet Line Is Dropped, Total Fixed Costs

question 95

Multiple Choice

Head Bucket, Inc. has two product lines-batting helmets and football helmets. The income statement data for the most recent year is as follows: $$\begin{array} { | l | r | r | r | } \hline & { \text { Total } } & \text { Batting Helmets } & \text { Football Helmets } \\\hline \text { Sales revenue } & \$ 840,000 & \$ 500,000 & \$ 340,000 \\\hline \text { Variable costs } & ( 440,000 & ( 150,000 & ( 290,000 ) \\\hline \text { Contribution margin } & \$ 400,000 & \$ 350,000 & \$ 50,000 \\\hline \text { Fixed costs } & ( 162,000 & ( 70,000 & \$ 92,000 ) \\\hline \text { Operating income (loss) } & \$ 238,000 & \$ 280,000 & \$ ( 42,000 ) \\\hline\end{array}$$ 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 batting helmets, operating income will be ________.

• A) $350,000
• B) $162,000
• C) $538,000
• D) $280,000

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