Please show your work and briefly explain it, thank you! QUESTION ANSWER $(10,00

Question

Please show your work and briefly explain it, thank you!

QUESTION ANSWER $(10,000) Jones Company has the following data for one of the chair models. This information is for the deluxe chair model: $(2,000) $100,000 80,000 20,000 30,000 $(10,000) Sales Variable Costs $10,000 Contribution Margin 20 Fixed Costs $2,000 Operating Income Assume that if the deluxe chair model is dropped, there would be a savings of 40% of the current fixed costs DON'T KNOW YET If the deluxe model chair is dropped from the product line, the company's overall net income would increase or decrease by how much? submit

Explanation / Answer

If the deluxe chair model is drropped they will save 40% *30000 = 12000

30000 -12000 = 18000 cannot be eliminated

Decrease in sales (100000)

Less Decrease in variable cost 80000

Less Decrease in fixed cost 18000

Expected decrease in operating income =(2000)

So answer is ($ 2000)

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