Blowing Sand Company produces the Drafty model fan, which currently has a net loss of $59,000...

 

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Blowing Sand Company produces the Drafty model fan, which currently has a net loss of $59,000 as follows: Drafty Model Sales revenue Less: Variable costs Contribution margin Less: Direct fixed costs Segment margin Less: Common fixed costs Net operating income (loss) $ 240,000 168,000 $ 72,000 59,000 $ 13,000 72,000 $ (59,000) Eliminating the Drafty product line would eliminate $59,000 of direct fixed costs. The $72,000 of common fixed costs would be redistributed to Blowing Sand's remaining product lines. Required: Will Blowing Sand's net operating income increase or decrease if the Drafty model is eliminated? By how much? Total profit by Blowing Sand Company produces the Drafty model fan, which currently has a net loss of $59,000 as follows: Drafty Model Sales revenue Less: Variable costs Contribution margin Less: Direct fixed costs Segment margin Less: Common fixed costs Net operating income (loss) $ 240,000 168,000 $ 72,000 59,000 $ 13,000 72,000 $ (59,000) Eliminating the Drafty product line would eliminate $59,000 of direct fixed costs. The $72,000 of common fixed costs would be redistributed to Blowing Sand's remaining product lines. Required: Will Blowing Sand's net operating income increase or decrease if the Drafty model is eliminated? By how much? Total profit by

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To determine the impact on Blowing Sand Companys net operating income if the Drafty model is elimina... View the full answer