Blowing Sand Company produces the Drafty model fan, which currently has a net lo
ID: 2546726 • Letter: B
Question
Blowing Sand Company produces the Drafty model fan, which currently has a net loss of $48,000 as follows Drafty Model $320,000 224,000 $ 96,000 86,000 10,000 58,000 $ (48,000) Sales revenue Less: Variable costs Contribution margin Segment margin Net operating income (loss) Less: Direct fixed costs Less: Common fixed costs Eliminating the Drafty product line would eliminate $86,000 of direct fixed costs. The $58,000 of common fixed costs would be redistributed to Blowing Sand's remaining product lines. Will Blowing Sand's net operating income increase or decrease if the Drafty model is eliminated? By how much? Total Profit lryExplanation / Answer
Total profit would decrease by $10000