The Income Statement for Nighty Night,Inc Nighty Night,Inc

The income statement for Nighty Night,Inc.is divided into two product lines,blankets and pillows,as follows:
$$\begin{array} { | l | r | r | r | } \hline & { \text { Blankets } } &{ \text { Pillows } } & { \text { Total } } \\\hline \text { Sales revenue } & \$ 700,000 & \$ 500,000 & \$ 1,200,000 \\\hline \text { Variable costs } & \underline { 250,000 } & \underline { 430,000 } & \underline { 680,000 } \\\hline \text { Contribution margin } & 450,000 & 70,000 & 520,000 \\\hline \text { Fixed costs } & \underline { 65,000 } & \underline { 85,000 } & \underline { 150,000 } \\\hline \text { Operating income (loss) } & \$ 385,000 & \$ ( 15,000 & \$ 370,000 \\\hline\end{array}$$ Nighty Night,Inc.should eliminate the pillows product line only,if by doing so,they can eliminate more than $70,000 of fixed costs.

Correct Answer:

Verified

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

Access For Free