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Author Question: Pottery Unlimited has two product lines: cups and pitchers. Income statement data for the most ... (Read 111 times)

NClaborn

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

TotalCupsPitchers
Sales revenue$460,000$310,000$150,000
Variable expenses355,000235,000120,000
Contribution margin105,00075,00030,000
Fixed expenses76,00038,00038,000
Operating income (loss)$29,000$37,000$(8,000)


If $20,000 of Pottery Unlimited's fixed costs will be eliminated by dropping the Pitcher line, how will operating income be affected?
◦ Increase $2,000
◦ Decrease $10,000
◦ Increase $12,000
◦ Decrease $20,000


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Marked as best answer by NClaborn on Jan 4, 2020

micaelaswann

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NClaborn

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Reply 2 on: Jan 4, 2020
Excellent


hramirez205

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Reply 3 on: Yesterday
Great answer, keep it coming :)

 

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