Haley's Hen House is a wholesaler of chickens to farmers across the country. Haley sells three types of chickens to her customers: Black, Brown, and White chickens. Below is a traditional departmental income statement for the quarter ended 09/30/2022. Black Brown White Sales Revenue $30,000 $50,000 $25,000 Cost of Goods Sold) ($6,000) ($40,000) ($20,000) Gross Profit $24,000 $10,000 $5,000 Operating ($8,500) ($5,500) ($8,000) Expenses) Operating Income $15,500 $4,500 ($3,000) 50% of the cost of goods sold for reach product line is variable. The remaining cost of goods sold consists of traceable fixed costs. Operating expenses include $11,500 f common fixed costs that have been arbitrarily allocated to the various product nes as follows: $3,000 to Black Chickens, $4,500 to Brown Chickens, and $4,000 to White Chickens. The remaining operating expenses consist of variable costs. Which of the following statements is correct with regard to the above information? If the White Chicken line was dropped the company's operating income would increase by $3,000. Operating income using the segmented margin income statement would be $28,500. The contribution margin percentage for the Brown Chickens line is 58%. The company's common fixed costs would decrease by $3,000 if the Black Chickens line was discontinued. Total traceable costs for the Black Chickens line are $14,500.
Haley's Hen House is a wholesaler of chickens to farmers across the country. Haley sells three types of chickens to her customers: Black, Brown, and White chickens. Below is a traditional departmental income statement for the quarter ended 09/30/2022. Black Brown White Sales Revenue $30,000 $50,000 $25,000 Cost of Goods Sold) ($6,000) ($40,000) ($20,000) Gross Profit $24,000 $10,000 $5,000 Operating ($8,500) ($5,500) ($8,000) Expenses) Operating Income $15,500 $4,500 ($3,000) 50% of the cost of goods sold for reach product line is variable. The remaining cost of goods sold consists of traceable fixed costs. Operating expenses include $11,500 f common fixed costs that have been arbitrarily allocated to the various product nes as follows: $3,000 to Black Chickens, $4,500 to Brown Chickens, and $4,000 to White Chickens. The remaining operating expenses consist of variable costs. Which of the following statements is correct with regard to the above information? If the White Chicken line was dropped the company's operating income would increase by $3,000. Operating income using the segmented margin income statement would be $28,500. The contribution margin percentage for the Brown Chickens line is 58%. The company's common fixed costs would decrease by $3,000 if the Black Chickens line was discontinued. Total traceable costs for the Black Chickens line are $14,500.
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Transcribed Image Text:Haley's Hen House is a wholesaler of chickens to farmers across the country. Haley
sells three types of chickens to her customers: Black, Brown, and White chickens.
Below is a traditional departmental income statement for the quarter ended
09/30/2022.
Black
Brown
White
Sales Revenue
$30,000
$50,000
$25,000
(Cost of Goods Sold) ($6,000)
($40,000)
($20,000)
Gross Profit
$24,000
$10,000
$5,000
(Operating
($8,500)
($5,500)
($8,000)
Expenses)
Operating Income
$15,500
$4,500
($3,000)
50% of the cost of goods sold for reach product line is variable. The remaining cost
of goods sold consists of traceable fixed costs. Operating expenses include $11,500
of common fixed costs that have been arbitrarily allocated to the various product
lines as follows: $3,000 to Black Chickens, $4,500 to Brown Chickens, and $4,000 to
White Chickens. The remaining operating expenses consist of variable costs.
Which of the following statements is correct with regard to the above information?
If the White Chicken line was dropped the company's operating income would
increase by $3,000.
Operating income using the segmented margin income statement would be
$28,500.
The contribution margin percentage for the Brown Chickens line is 58%.
The company's common fixed costs would decrease by $3,000 if the Black
Chickens line was discontinued.
Total traceable costs for the Black Chickens line are $14,500.
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