The income statement for Eideldown, Inc. is divided by its two product lines, blankets and pillows, as follows:
Blankets Pillows Total
Sales revenue $ 700,000 $ 700,000 $ 1,400,000
Variable costs 250,000 430,000 680,000
Contribution margin 450,000 270,000 720,000
Fixed costs 75,000 75,000 150,000
Operating income (loss) $ 375,000 $ 195,000 $ 570,000
If total fixed costs remain unchanged and Eideldown, Inc. drops the pillows line, operating income will decrease by $ 270,000. How would this business decision impact operating income?
Answers: 2
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The income statement for Eideldown, Inc. is divided by its two product lines, blankets and pillows,...
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