Faros Hats,Inc What Is the Effect of Dropping Football Helmets Line on Statement

question 146

Multiple Choice

Faros Hats,Inc.has two product lines-batting helmets and football helmets.The income statement data for the most recent year is as follows: $$\begin{array} { | l | r | r | r | } \hline & { \text { Total } } & \text { Batting Helmets } & \text { Football Helmets } \\\hline \text { Sales revenue } & \$ 850,000 & \$ 500,000 & \$ 350,000 \\\hline \text { Variable costs } & ( 440,000 & ( 150,000 ) & ( 290,000 ) \\\hline \text { Contribution margin } & \$ 410,000 & \$ 350,000 & \$ 60,000 \\\hline \text { Fixed costs } & ( 190,000 & \$ 90,000 ) & ( 100,000 ) \\\hline \text { Operating income (loss) } & \$ 220,000 & \$ 260,000 & \$ ( 40,000 ) \\\hline\end{array}$$ What is the effect of dropping football helmets line on the operating income of the company? (Assume that fixed costs remain unchanged and that there would be no adverse effect on other sales. )

• A)Operating income will increase by $40,000.
• B)Operating income will increase by $90,000.
• C)Operating income will decrease by $60,000.
• D)Operating income will decrease by $350,000.

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Definitions:

Primatologists

Scientists who study primates, including monkeys, apes, and humans, focusing on their behavior, biology, and evolution, and their interactions with environments and societies.

Nonhuman Primates

Primates that are not human beings, including monkeys, apes, and lemurs, often studied to gain insights into human evolution and behavior.

Teams

Groups of individuals working together towards a common goal, characterized by shared responsibilities and collaborative effort.

Strepsirhines

A suborder of primates that includes lemurs and lorises, characterized by traits like a wet nose and large eyes for nocturnal activity.