Big Fish Rod Company makes fly fishing rods in three sizes: 8-foot, 9-foot, and 10-foot. 10-foot...

 

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Big Fish Rod Company makes fly fishing rods in three sizes: 8-foot, 9-foot, and 10-foot. 10-foot rods have shown a loss for several years, and, as a result, Big Fish is considering eliminating the 10-foot fly rod. Big Fish provides the following operating data for the past year: 8-foot rod 9-foot rod 10-foot rod Sales $350,000 $250,000 $150,000 105,000 150,000 100,000 Variable Costs 200,000 45,000 Contribution Margin 150,000 90,000 90,000 90,000 Fixed Costs $60,000 $10,000 ($45,000) Net Operating Income Of the $90,000 of fixed costs for each rod, $50,000 is traceable to the rod, and $40,000 would be reallocated if the rod were to be eliminated. What would be the effect on the company's overall net operating income if the 10-foot rod is eliminated? O Increase by $5,000 O Increase by $45,000 O Decrease by $5,000 O Decrease by $45,000 Big Fish Rod Company makes fly fishing rods in three sizes: 8-foot, 9-foot, and 10-foot. 10-foot rods have shown a loss for several years, and, as a result, Big Fish is considering eliminating the 10-foot fly rod. Big Fish provides the following operating data for the past year: 8-foot rod 9-foot rod 10-foot rod Sales $350,000 $250,000 $150,000 105,000 150,000 100,000 Variable Costs 200,000 45,000 Contribution Margin 150,000 90,000 90,000 90,000 Fixed Costs $60,000 $10,000 ($45,000) Net Operating Income Of the $90,000 of fixed costs for each rod, $50,000 is traceable to the rod, and $40,000 would be reallocated if the rod were to be eliminated. What would be the effect on the company's overall net operating income if the 10-foot rod is eliminated? O Increase by $5,000 O Increase by $45,000 O Decrease by $5,000 O Decrease by $45,000

Answer rating: 100% (QA)

If the rod 10 is eliminated companys net operating income would increase by 450... View the full answer