Head Bucket, Inc. has two productlines—battinghelmets and football helmets. The income statement data for the most recent year is as follows: TotalBatting HelmetsFootball HelmetsSales revenue$950,000$600,000$350,000Variable costs(480,000)(200,000)(280,000)Contribution margin$470,000$400,000$70,000Fixed costs(182,000)(90,000)(92,000)Operating income (loss)$288,000$310,000$(22,000) Assuming the football helmet line is dropped, total fixed costs remain unchanged, and the space formerly used to produce the football helmet line is used to double the production of batting helmets, operating income will be ________. A.$400,000 B.$310,000 C.$182,000 D.$618,000

Operating income (loss)=Sales revenue-Variable costs+Fixed costs

Answered: Head Bucket, Inc. has two product…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Head Bucket, Inc. has two product

lines—batting

helmets and football helmets. The income statement data for the most recent year is as follows:

	Total	Batting Helmets	Football Helmets
Sales revenue	$950,000	$600,000	$350,000
Variable costs	(480,000)	(200,000)	(280,000)
Contribution margin	$470,000	$400,000	$70,000
Fixed costs	(182,000)	(90,000)	(92,000)
Operating income (loss)	$288,000	$310,000	$(22,000)

Assuming the football helmet line is dropped, total fixed costs remain unchanged, and the space formerly used to produce the football helmet line is used to double the production of batting helmets, operating income will be ________.

$400,000

$310,000

$182,000

$618,000

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