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Stretch Inc. sells both yoga pants and yoga mats. Managers for Stretch are concerned about their operating...

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Accounting

StretchInc. sells both yoga pants and yoga mats. Managers for Stretch areconcerned about their operating losses. They are consideringdropping their yoga mat product line. Operating income by prouctline is shown below. Prepare a new operating income analysisassuming Stretch will only sell yoga pants. Then explain whyStretch should drop the yoga mat product line.
Stretch Inc.
Income Statement
For year ended December 31, 2017
TotalYoga PantsYoga Mats
Sales Revenue$        425,000$        299,000$        126,000
Variable Costs          221,000          136,000            85,000
Contribution Margin          204,000          163,000            41,000
Fixed Costs:   
Fixed Manufacturing          123,000            62,000            61,000
Selling & Administrative            58,000            46,000            12,000
Operating Income            23,000            55,000          (32,000)
Stretch Inc.
Income Statement
For year ended December 31, 2017
Total
Sales Revenue
Variable Costs
Contribution Margin
Fixed Costs:
Fixed Manufacturing
Selling & Administrative
Operating Income
Explanation:

Answer & Explanation Solved by verified expert
3.6 Ratings (386 Votes)
Requirement Stretch Inc Income Statement For year ended December 31 2017 Total Sales Revenue 299000 Variable Costs 136000 Contribution Margin 163000 Fixed Costs Fixed    See Answer
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