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bekas [8.4K]
3 years ago
8

Dogs R Us has two product lines: collars and leashes. Income statement data forecasted for next year is as follows: COLLARS LEAS

HES TOTAL Sales revenue $210,000 $150,000 $360,000 Variable expenses $135,000 $120,000 $255,000 Contribution margin $75,000 $30,000 $105,000 Fixed expenses $56,000 $38,000 $94,000 Operating income (loss) $19,000 ($8,000) $11,000 If $27,435 in fixed costs will be eliminated by dropping the LEASHES line, how will TOTAL operating income be affected after the Leashes line is dropped? If income drops, use a negative sign in front of the number.
Business
1 answer:
Temka [501]3 years ago
8 0

Answer: -$2,565

Explanation:

Operating Income with the Leashes line is $11,000.

If the Leashes line is dropped, the operating income would be:

= Sales of Collars - Variable expenses - Fixed expenses of Collars - Residual fixed expenses pf Leashes

= 210,000 - 135,000 - 56,000 - (38,000 - 27,435)

= $‭8,435

Change in Total income =  Income without Leashes - Income with LEASHES

= 8,435 - 11,000

= -$2,565

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