Question: Molar Industries Inc. has three product lines: tooth paste, tooth brushes, and dental floss. Common fised costs of $450,000 are allocated to product lines based
Molar Industries Inc. has three product lines: tooth paste, tooth brushes, and dental floss. Common fised costs of $450,000 are allocated to product lines based on unit sales. Here is the most recent income statement, by product line: Sales Variable costs Contribution margin Direct fixed costs Tooth paste Tooth brushes Dental floss $1,080,000 (420,000) $660,000 (270,000) (1 80,000) $1,300,000 1,260,000 (1,198,000) $102,000 (1 50,000) (60,000) (660,000) $600,000 (210,000) (210,000) $180,000 Common fixed costs Operating income (loss) S(108,000) $210,000 Molar is evaluating whether or not to discontinue the production and sale of tooth paste. If Molar discontinues the tooth paste product line, how would this impact Molar's operating income? Decrease by $102,000 Increase by $102,000 Increase by $48,000 Increase by $108,000 None of the above
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