Crash Sports,Inc If $50,000 of Fixed Costs Will Be Eliminated by Dropping

question 41

Multiple Choice

Crash Sports,Inc.has two product lines-batting helmets and football helmets.The income statement data for the most recent year is as follows: $$\begin{array} { | l | r | r | r | } \hline & { \text { Total } } & \text { Batting Helmets } & \text { Football Helmets } \\\hline \text { Sales revenue } & \$ 1,050,000 & \$ 700,000 & \$ 350,000 \\\hline \text { Variable costs } & \underline { ( 530,000 } & \underline { ( 250,000 ) } & ( 280,000 ) \\\hline \text { Contribution margin } & \$ 520,000 & \$ 450,000 & \$ 70,000 \\\hline \text { Fixed costs } & ( 170,000 & ( 80,000 ) & ( 90,000 ) \\\hline \text { Operating income (loss) } & \$ 350,000 & \$ 370,000 & \$ ( 20,000 ) \\\hline\end{array}$$ If $50,000 of fixed costs will be eliminated by dropping the football helmets line,how will dropping football helmets affect operating income of the company?

• A) Operating income will increase by $50,000.
• B) Operating income will increase by $70,000.
• C) Operating income will decrease by $90,000.
• D) Operating income will decrease by $20,000.

Comprehend the impact of family structure and societal factors on the development of children and adolescents.

Explore changes in attitudes and moral judgments throughout the lifespan.

Understand the biological aspects of development including genetic inheritance and the physical changes during puberty.

Learn about the psychological development across a human’s lifespan, including identity formation and coping mechanisms in older adults.

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