Wilson Racquet Manufacturers produces three different types of tennis racquets: Control Racquet, Tweener Racquet, and a Power Racquet. Financial information for the three racquet product lines is shown below: If the fixed expenses for the Power Racquet line are not avoidable since they are allocated fixed costs, what will be total operating income be if the Power Racquet line is dropped?
A)$125,000
B) $103,000
C) $105,000
D) $140,000

Question

Wilson Racquet Manufacturers produces three different types of tennis racquets: Control Racquet, Tweener Racquet, and a Power Racquet. Financial information for the three racquet product lines is shown below:  If the fixed expenses for the Power Racquet line are not avoidable since they are allocated fixed costs, what will be total operating income be if the Power Racquet line is dropped?
A)$125,000 
B) $103,000 
C) $105,000 
D) $140,000

Quizplus · Accepted Answer

(Control: Oper. Income + Tweener: Oper. Income - Power: Fixed Expenses = Total Oper. Income if the line is dropped) = $50,000 + $75,000 - 22,000 = $103,000.

Wilson Racquet Manufacturers Produces Three Different Types of Tennis Racquets