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What is the operating income for faros hats etc

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Reference no: EM131786818

Problem

Faros Hats, Etc. has two product lines-baseball helmets and football helmets. Income statement data for the most recent year follow:

Total

Baseball Helmets

Football Helmets

Sales revenue

$850,000

$500,000

$350,000

Variable expenses

(530,000)

(250,000)

(280,000)

Contribution margin

$320,000

$250,000

$70,000

Fixed expenses

(180,000)

(90,000)

(90,000)

Operating income (loss)

$140,000

$160,000

$(20,000)

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 Baseball Helmets, operating income will be:

A. $410,000
B. $320,000
C. $180,000
D. $250,000.

Reference no: EM131786818

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