What impact would have on operating income

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Reference no: EM132602903

Holy Shirts and Pants Co. makes two products, shirts and pants. Their sales information is below.

                                               Total                      Shirts                         Pants

Sales revenue              ?$1,200,000                 ?$850,000               $350,000

Variable expenses              ?950,000               ?720,000                   ?230,000

Contribution margin            ?250,000                 ?130,000               ?120,000

Fixed expenses                  ?250,000                 ?125,000               ?125,000

Operating income? (loss)            ?$0                     ?$5,000               ?$(5,000)

Question 1: The company is considering closing the pants line, saving $115,000 in fixed expenses. What impact would this have on operating income?

Group of answer choices

Option 1: Decrease $5,000

Option 2: Increase $10,000

Option 3: Increase $5,000

Option 4: Increase $5,000

Reference no: EM132602903

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