Question: Suppose that Blowing Sand Company also produces the Drafty model

Suppose that Blowing Sand Company also produces the Drafty model fan, which currently has a net loss of $43,000 as follows:


Eliminating the Drafty product line would eliminate $18,000 of direct fixed costs. The $50,000 of common fixed costs would be redistributed to Blowing Sand’s remaining product lines. Will Blowing Sand’s net operating income increase or decrease if the Drafty model is eliminated? By howmuch?
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  • CreatedFebruary 27, 2015
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