assuming the fashion boots line is discontinued, total fixed costs remain unchanged, and the space formerly used to produce the line is rented for $28,000 per year, how will operating income be affected?

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26-10-2022
Business

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assuming the fashion boots line is discontinued, total fixed costs remain unchanged, and the space formerly used to produce the line is rented for $28,000 per year, how will operating income be affected?

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RajeevKumarBag RajeevKumarBag · Answer 1 · 2022-10-31T05:08:44+01:00

The fixed costs would stay at $39000, but there would be a $28,000 annual profit instead.

Therefore, the overall operating profit would be =(36000-39000+28000)=$25000.

So there would be a $8000 rise (B).

Gross Profit - Operating Expenses - Depreciation - Amortization equals Operating Profit.

Is operational profit the same as EBIT?

EBIT, or earnings before interest and taxes, is a measure of how profitable a business is. Revenue less expenses, without taxes and interest, is EBIT. Operating earnings, operating profit, and profit before interest and taxes are other names for EBIT.

What makes operating profit so special?

Selling, general and administrative (SG&A), depreciation, amortization, and other operating expenses are all considered operating costs. Operating income is frequently referred to as EBIT because it does not include taxes or interest costs.

To learn more about Operating Profit from the given link.

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