Solved

ABC Corporation Makes Mattresses in Three Sizes: Twin,queen and King

Question 147

Multiple Choice

ABC Corporation makes mattresses in three sizes: twin,queen and king.Twin mattresses have shown a loss for several years,similar to the operating loss shown below:
 Twin  Queen  King  Sales $150,000$250,000$280,000 Variable costs 75,000150,000190,000 Contribution margin 75,000100,00090,000 Fixed costs 80,00080,00080,000 Operating income $5,000$20,000$10,000\begin{array}{lrrr} & \underline{\text { Twin }} & \underline{\text { Queen }} & \underline{\text { King }} \\\text { Sales } & \$ 150,000 & \$ 250,000 & \$ 280,000 \\\text { Variable costs } & \underline{75,000} & \underline{150,000} & \underline{190,000} \\\text { Contribution margin } & 75,000 & 100,000 & 90,000 \\\text { Fixed costs } & \underline{80,000} & \underline{80,000} & \underline{80,000} \\\text { Operating income } & \$ 5,000 & \$ 20,000 & \$ 10,000\end{array} None of the fixed cost is avoidable.What will total operating income for the corporation be if twin mattresses are discontinued?


A) $50,000 loss
B) $15,000 loss
C) $30,000 profit
D) $105,000 profit

Correct Answer:

verifed

Verified

Unlock this answer now
Get Access to more Verified Answers free of charge

Related Questions

Unlock this Answer For Free Now!

View this answer and more for free by performing one of the following actions

qr-code

Scan the QR code to install the App and get 2 free unlocks

upload documents

Unlock quizzes for free by uploading documents