Blowing Sand Company produces the Drafty model fan, which currently has a net loss of $48.000 as follows: Drafty Model $ 320,000 224,000 $ 96,000 86,000 $10,000 18,000 (48,000) Sales revenue Less: Variable costs Contribution margin Less: Direct fixed costs Segnent margin Less: Common fixed costs Net operating income (loss) Eliminating the Drafty product line would eliminate $86,000 of direct fixed costs. The $58,000 of common fixed costs would be redistributed to Blowing Sand's remaining product lines. Required: Will Blowing Sand's net operating income increase or decrease if the Drafty model is eliminated? By how much? Total profit

Blowing Sand Company produces the Drafty model fan, which currently has a net loss of $48.000 as follows: Drafty Model $ 320,000 224,000 $ 96,000 86,000 $10,000 18,000 (48,000) Sales revenue Less: Variable costs Contribution margin Less: Direct fixed costs Segnent margin Less: Common fixed costs Net operating income (loss) Eliminating the Drafty product line would eliminate $86,000 of direct fixed costs. The $58,000 of common fixed costs would be redistributed to Blowing Sand's remaining product lines. Required: Will Blowing Sand's net operating income increase or decrease if the Drafty model is eliminated? By how much? Total profit

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter8: Tactical Decision-making And Relevant Analysis

Section: Chapter Questions

Problem 11MCQ: Garrett Company provided the following information: Common fixed cost totaled 46,000. Garrett...

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