Question

Sheffield Corp. produces three versions of baseball bats: wood, aluminum, and hard rubber. A condensed segmented income statement for a recent period follows: Wood Aluminum Hard Rubber Total Sales $510000 $200000 $65000 $775000 Variable expenses 325000 140000 58000 523000 Contribution margin 185000 60000 7000 252000 Fixed expenses 75000 35000 22000 132000 Net income (loss) $110000 $ 25000 $(15000) $120000 Assume none of the fixed expenses for the hard rubber line are avoidable. What will be total net income if the line is dropped? $140000 $105000 $135000 $113000

Answer 1

Answer:

The correct answer is D.

Explanation:

Giving the following information:

Sales=$775000

Variable expenses= 523000

Contribution margin= 252000

Fixed expenses= 132000

Net income= $120000

Hard Rubber:

Sales=$65000

Variable expenses=58000

Contribution margin= 7000

Fixed expenses= 22000

Net income= -15000

New net income= 120,000 + 15,000 - 22,000= 113,000