Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

How To Adult Personal Finance For The Real World

Authors: Jake Cousineau

1st Edition

8581084830, 979-8581084830

More Books

Students also viewed these Finance questions