The following information is available on Crain Co.'s two product lines: Assuming the tables line is discontinued

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The following information is available on Crain Co.'s two product lines:

Chairs Tables $180,000 $ 48,000 Sales Variable costs (96,000) (30,000) Contribution margin $ 84,000 $ 18,000 Fixed costs

Assuming the tables line is discontinued and the factory space previously used to make tables is rented for $24,000 per year, operating income will increase by what amount?
a. $28,800
b. $24,000
c. $13,200
d. $18,000

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Managerial Accounting

ISBN: 9780073526706

12th Edition

Authors: Ray H. Garrison, Eric W. Noreen, Peter C. Brewer

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Question Posted: Jan 05, 2018 10:47 AM

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The following information is available on Crain Co.'s two product lines: Assuming the tables line is discontinued

Question:

Chairs Tables $180,000 $ 48,000 Sales Variable costs (96,000) (30,000) Contribution margin $ 84,000 $ 18,000 Fixed costs: Avoidable (36,000) (12,000) Unavoidable (18,000) (10,800) Operating income (loss)$ 30,000 $(4,800)

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D is correct When making a decision the only relevant revenues and costs are those ...View the full answer

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