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What will total operating income be

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Question - Cullumber Industries manufactures light fixtures for home, retail, and industrial customers. The retail line has been showing losses for several years, and management is considering dropping the line. Recent income statements have been very similar to the following information which was prepared for the most recent year:

 

Home

Retail

Industrial

Total

Sales

$551400

$321400

$831400

$1704200

Variable costs

359000

219100

682300

1260400

Contribution margin

192400

102300

149100

443800

Fixed costs

126400

131400

116400

374200

Operating income

$66000

$(29100)

$32700

$69600

Of the fixed costs, $319200 of it is common costs that have been allocated equally to each product line. What will total operating income be if Cullumber drops the retail line?

a. $22300

b. $(7700)

c. $77300

d. $98700

Reference no: EM133033101

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