Use the information below to answer the following question(s):
Pottery Unlimited has two product lines: cups and pitchers. Income statement data for the most recent year follow:

-Assuming Pottery Unlimited's fixed costs remain unchanged, how would dropping the Pitcher line affect operating income?

Question

Use the information below to answer the following question(s):
Pottery Unlimited has two product lines: cups and pitchers. Income statement data for the most recent year follow:
 
-Assuming Pottery Unlimited's fixed costs remain unchanged, how would dropping the Pitcher line affect operating income?

Quizplus · Accepted Answer

Dropping the Pitcher line would result in a decrease in total operating income of $30,000 because the fixed costs remain unchanged, and the contribution margin from the Pitcher line would be lost.

Use the Information Below to Answer the Following Question(s)