Question
Beautiful Watches has two product lines: Luxury watches and Sporty watches. Income statement data for the most recent year follow: ...................................................Total........................Luxury.........................Sporty Sales revenue..........................$490,000.................$360,000.....................$130,000 Variable expenses.....................359,000...................235,000.......................124,000
Beautiful Watches has two product lines: Luxury watches and Sporty watches. Income statement data for the most recent year follow: ...................................................Total........................Luxury.........................Sporty Sales revenue..........................$490,000.................$360,000.....................$130,000 Variable expenses.....................359,000...................235,000.......................124,000 Contribution margin.................131,000...................125,000............................6000 Fixed expenses............................76,000.....................38,000..........................38,000 Operating income (loss)...........$55,000...................$87,000.......................-$32,000 Assuming fixed costs remain unchanged, how would discontinuing the Sporty line affect operating income?
A) Decrease in total operating income of $6000
B) Decrease in total operating income of $131,000
C) Increase in total operating income of $49,000
D) Increase in total operating income of $130,000
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