SandhillIndustries manufactures light fixtures for home, retail, and industrial customers. The retail line has been...
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Accounting
SandhillIndustries manufactures light fixtures for home, retail, and industrial customers. The retail line has been showing losses for several years, and management is considering dropping the line. Recent income statements have been very similar to the following information which was prepared for the most recent year:
| Home | Retail | Industrial | Total | |
|---|---|---|---|---|
| Sales | $551000 | $321000 | $831000 | $1703000 |
| Variable costs | 358800 | 218700 | 681600 | 1259100 |
| Contribution margin | 192200 | 102300 | 149400 | 443900 |
| Fixed costs | 126000 | 131000 | 116000 | 373000 |
| Operating income | $66200 | $(28700) | $33400 | $70900 |
Of the fixed costs, $318000 of it is common costs that have been allocated equally to each product line. What will total operating income be if Sandhill drops the retail line?
$23600
$99600
$(6400)
$77300
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