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Question - Pharoah Corporation makes mattresses in three sizes: twin, queen and king. Twin mattresses have shown a loss for several years, similar to the operating loss shown below:
Twin
Queen
King
Sales
$156000
$256000
$286000
Variable costs
78000
153000
190000
Contribution margin
103000
96000
Fixed costs
86000
Operating income
($8000)
$17000
$10000
None of the fixed costs are avoidable. What will be the total operating income for the corporation if twin mattresses are discontinued?
a. $27000 profit
b. $105000 profit
c. $59000 loss
d. $24000 loss
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