Question

The company is deciding whether to drop product line F because it has an operating loss. Assuming fixed costs are​ unavoidable, if Karlson drops product line F and rents the space formerly used to produce product F for per​ year, total operating income will be

Answer 1

$65,000

Step-by-step explanation:

a lot of information is missing, so I looked at a similar question to fill in the blanks:

product D product E product F

Sales revenue $90,000 $50,000 $30,000

Variable costs (40,000 ) (10,000 ) (11,000 )

Contribution margin $50,000 $40,000 $19,000

Fixed costs (10,000 ) (10,000 ) (24,000 )

Operating income (loss) $40,000 $30,000 ($5,000 )

product F's facilities can be rented for $19,000

net unavoidable fixed costs = $19,000 - $24,000 = ($5,000)

product D product E product F

Sales revenue $90,000 $50,000

Variable costs (40,000 ) (10,000 )

Contribution margin $50,000 $40,000

Fixed costs (10,000 ) (10,000 )

Operating income (loss) $40,000 $30,000 ($5,000 )

total income = $40,000 + $30,000 - $5,000 = $65,000