Accessibility Products Company has three models: D,E,and F.The following information is available:
$\begin{array} { | l | r | r | r | }
\hline & { \text { Model D } } &{ \text { Model E } } & { \text { Model F } } \
\hline \text { Sales revenue } & \$ 55,000 & \$ 35,000 & \$ 29,000 \
\hline \text { Variable expenses } & \$ 32,000 & \$ 13,000 & \$ 14,000 \
\hline \text { Contribution margin } & \$ 23,000 & \$ 22,000 & \$ 15,000 \
\hline \text { Fixed expenses } & \$ 16,000 & \$ 16,000 & \$ 16,000 \
\hline \text { Operating income (loss) } & \$ 7,000 & \$ 6,000 & \$ ( 1,000 ) \
\hline
\end{array}$
- Accessibility Products Company is thinking of dropping model F because it is reporting an operating loss.All fixed costs are unavoidable.If Accessibility Products Company drops model F and rents the space formerly used to produce product F for $12,000 per year,what effect will this have on operating income,as compared to the total operating income (loss)if they keep Model F?

Question

Accessibility Products Company has three models: D,E,and F.The following information is available:
 $\begin{array} { | l | r | r | r | } 
\hline &  { \text { Model D } } &{ \text { Model E } } & { \text { Model F } } \
\hline \text { Sales revenue } & \$ 55,000 & \$ 35,000 & \$ 29,000 \
\hline \text { Variable expenses } & \$ 32,000 & \$ 13,000 & \$ 14,000 \
\hline \text { Contribution margin } & \$ 23,000 & \$ 22,000 & \$ 15,000 \
\hline \text { Fixed expenses } & \$ 16,000 & \$ 16,000 & \$ 16,000 \
\hline \text { Operating income (loss) } & \$ 7,000 & \$ 6,000 & \$ ( 1,000 ) \
\hline
\end{array}$
- Accessibility Products Company is thinking of dropping model F because it is reporting an operating loss.All fixed costs are unavoidable.If Accessibility Products Company drops model F and rents the space formerly used to produce product F for $12,000 per year,what effect will this have on operating income,as compared to the total operating income (loss)if they keep Model F?

Quizplus · Accepted Answer

The Answer of  Accessibility Products Company has three models: D,E,and F.The following information is available:
 $\begin{array} { | l | r | r | r | } 
\hline &  { \text { Model D } } &{ \text { Model E } } & { \text { Model F } } \
\hline \text { Sales revenue } & \$ 55,000 & \$ 35,000 & \$ 29,000 \
\hline \text { Variable expenses } & \$ 32,000 & \$ 13,000 & \$ 14,000 \
\hline \text { Contribution margin } & \$ 23,000 & \$ 22,000 & \$ 15,000 \
\hline \text { Fixed expenses } & \$ 16,000 & \$ 16,000 & \$ 16,000 \
\hline \text { Operating income (loss) } & \$ 7,000 & \$ 6,000 & \$ ( 1,000 ) \
\hline
\end{array}$
- Accessibility Products Company is thinking of dropping model F because it is reporting an operating loss.All fixed costs are unavoidable.If Accessibility Products Company drops model F and rents the space formerly used to produce product F for $12,000 per year,what effect will this have on operating income,as compared to the total operating income (loss)if they keep Model F?

Accessibility Products Company Has Three Models: D,E,and F - Accessibility Products Company Is Thinking of Dropping Model F