- Picture Paint Date and Insert drawing time object Select all Paragraph Insert Editing this document's format. Some content might be missing or displayed improperly. 2 314 5 1. A company produces two kinds of hammers: one with longer handles and one with shorter handles. The longer hammer uses better materials and has a better design for back support. During the past year, 200,000 shorter hammers and 50,000 longer hammers were produced and sold. Fixed costs amount to $500,000. If the shorter hammers were dropped from production, $180,000 of the fixed costs would be avoided. If the longer hammers were dropped 90,000 of the fixed costs would be avoided. Shorter Longer Variable expenses/unit $40 $86 Sales price/unit $44 $90 The contribution margin of the shorter and longer hammers, respectively is a $200,000/$800,000 c. $8000,000/S4,300,000 b. 5620,000/110,000 d. $800,000/$200,000 2. If the company stops producing the longer hammer, what will be the effect on the company's income? a Decrease by $200,000 Decrease by $800,000 Decrease by $110,000 d Decrease by $620,000 C