Gum Gum Corporation has three product lines, Spearmint, Peppermint, and Cinnamon. The following information is available:...

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Gum Gum Corporation has three product lines, Spearmint, Peppermint, and Cinnamon. The following information is available: Spearmint $120,000 98,000 22,000 Peppermint $70,000 49,000 21,000 Cinnamon $77,000 68.000 9,000 Sales Variable costs Contribution margin Fixed costs: Avoidable Unavoidable Operating income 9,000 5,000 $8.000 11,000 4,000 $6.000 6,000 7,000 $(4,000) Assuming the Cinnamon product line is discontinued, and the space formerly used to produce the Cinnamon product line is rented for $11,000 per year, will the operating income increase or decrease and by how much? Show your calculations. Gum Gum Corporation has three product lines, Spearmint, Peppermint, and Cinnamon. The following information is available: Spearmint $120,000 98,000 22,000 Peppermint $70,000 49,000 21,000 Cinnamon $77,000 68.000 9,000 Sales Variable costs Contribution margin Fixed costs: Avoidable Unavoidable Operating income 9,000 5,000 $8.000 11,000 4,000 $6.000 6,000 7,000 $(4,000) Assuming the Cinnamon product line is discontinued, and the space formerly used to produce the Cinnamon product line is rented for $11,000 per year, will the operating income increase or decrease and by how much? Show your calculations.

Answer rating: 100% (QA)

Solution Revenue foom venting the Space fo... View the full answer