Budgeted financial information for Bonita Broadway's upcoming fiscal year is presented below for each division. Sales...

  

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Budgeted financial information for Bonita Broadway's upcoming fiscal year is presented below for each division. Sales Variable costs Contribution margin Fixed costs Operating income Crystal Iron $426,000 $818,000 315,000 503,000 Chrome $1,191,000 766,000 425,000 232,000 232,000 $193,000 $(106,000) $271,000 300,000 126,000 232,000 All fixed costs are currently assigned evenly to all divisions. (a) If Bonita Broadway drops the crystal light fixtures line, it will save $131,000 in fixed costs (the dedicated manager's salary). In this case, will Bonita be better or worse off financially if it drops the crystal product line? By how much? Budgeted financial information for Bonita Broadway's upcoming fiscal year is presented below for each division. Sales Variable costs Contribution margin Fixed costs Operating income Crystal Iron $426,000 $818,000 315,000 503,000 Chrome $1,191,000 766,000 425,000 232,000 232,000 $193,000 $(106,000) $271,000 300,000 126,000 232,000 All fixed costs are currently assigned evenly to all divisions. (a) If Bonita Broadway drops the crystal light fixtures line, it will save $131,000 in fixed costs (the dedicated manager's salary). In this case, will Bonita be better or worse off financially if it drops the crystal product line? By how much?

Answer rating: 100% (QA)

Currently the Crystal division has an operating income of 106000 If th... View the full answer