Rocca Hats,Inc Assuming the Football Helmet Line Is Dropped,total Fixed Costs Remain

question 97

Multiple Choice

Rocca Hats,Inc.has two product lines-batting helmets and football helmets.The income statement data for the most recent year is as follows: $$\begin{array} { | l | r | r | r | } \hline & { \text { Total } } & \text { Batting Helmets } & \text { Football Helmets } \\\hline \text { Sales revenue } & \$ 950,000 & \$ 600,000 & \$ 350,000 \\\hline \text { Variable costs } & ( 430,000) & ( 150,000 ) & ( 280,000 ) \\\hline \text { Contribution margin } & \$ 520,000 & \$ 450,000 & \$ 70,000 \\\hline \text { Fixed costs } & ( 182,000) & ( 90,000 ) & ( 92,000 ) \\\hline \text { Operating income (loss) } & \$ 338,000 & \$ 360,000 & \$ ( 22,000 ) \\\hline\end{array}$$ 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) $450,000
• B) $182,000
• C) $718,000
• D) $360,000

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Definitions:

Defensible Space Theory

A concept in urban planning and architecture that posits that crime and delinquency can be reduced through the strategic design and management of the physical environment.

Design Features

Specific characteristics or aspects of a product, environment, or system that influence its function and aesthetics.

Formal Design

The planned and structured organization of elements in a system or artifact, following specific principles and guidelines.

Corporate Philosophy

A set of guiding principles and beliefs that define a company's values, ethics, and objectives, influencing its decisions and culture.