Faros Hats,Inc

question 83

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:

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 $70,000.
• D)Operating income will decrease by $350,000.

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Definitions:

Full-Service Retailers

Businesses that offer a wide range of services to their customers, including sales assistance and after-sales services.

Depth of Product Line

The range of different items of the same type that a company sells, offering variety to consumers.

Product Classes

Categories or groups of products that serve similar purposes and are perceived by consumers as related or comparable.