Dogs R Us has two product lines: collars and leashes. Income statement data forecasted for next year is as follows: COLLARS LEASHES TOTAL Sales revenue $210,000 $150,000 $360,000 Variable expenses $135,000 $120,000 $255,000 Contribution margin $75,000 $30,000 $105,000 Fixed expenses $56,000 $38,000 $94,000 Operating income (loss) $19,000 ($8,000) $11,000 If $27,435 in fixed costs will be eliminated by dropping the LEASHES line, how will TOTAL operating income be affected after the Leashes line is dropped? If income drops, use a negative sign in front of the number.

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Parrain Parrain · Answer 1 · 2021-03-27T02:10:22+01:00

Answer: -$2,565

Explanation:

Operating Income with the Leashes line is $11,000.

If the Leashes line is dropped, the operating income would be:

= Sales of Collars - Variable expenses - Fixed expenses of Collars - Residual fixed expenses pf Leashes

= 210,000 - 135,000 - 56,000 - (38,000 - 27,435)

= $‭8,435

Change in Total income = Income without Leashes - Income with LEASHES

= 8,435 - 11,000

= -$2,565

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Tundexi Tundexi · Answer 2 · 2022-03-22T12:20:03+01:00

The total operating income will be affected up to the sum of ($2,565) after the Leashes line is dropped.

Given data

Operating Income with the Leashes line is $11,000.

Now, If the Leashes line is dropped:

Operating income = Sales of Collars - Variable expenses - Fixed expenses of Collars - Residual fixed expenses pf Leashes

Operating income = 210,000 - 135,000 - 56,000 - (38,000 - 27,435)

Operating income = $‭8,435

Change in Total income = Income without Leashes - Income with Leashes

Change in Total income = $8,435 - $11,000

Change in Total income = -$2,565

Therefore, the total operating income will be affected up to the sum of ($2,565) after the Leashes line is dropped.