Author Question: Pottery Unlimited has two product lines: cups and pitchers. Income statement data for the most ... (Read 34 times)

Pea0909berry · **on:** Jan 4, 2020

Pottery Unlimited has two product lines: cups and pitchers. Income statement data for the most recent year follow:

	Total	Cups	Pitchers
Sales revenue	$460,000	$310,000	$150,000
Variable expenses	355,000	235,000	120,000
Contribution margin	105,000	75,000	30,000
Fixed expenses	76,000	38,000	38,000
Operating income (loss)	$29,000	$37,000	$(8,000)

Assuming the Pitcher line at Pottery Unlimited is dropped, total fixed costs remain unchanged, and the space formerly used to produce the Pitcher line is used to double the production of Cups, how will operating income be affected?
◦ Increase $45,000
◦ Decrease $45,000
◦ Increase $74,000
◦ Increase $150,000

kishoreddi · **Reply #1 on:** Jan 4, 2020

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