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Boots Plus has two product lines: Hiking boots and Fashion boots. Income statement data for the most recent year follow: Sales revenue Fashion $140,000 120,000
Boots Plus has two product lines: Hiking boots and Fashion boots. Income statement data for the most recent year follow: Sales revenue Fashion $140,000 120,000 111 Total $520,000 Hiking $380,000 Variable expenses 385,000 265,000 Contribution margin 135,000 115,000 Fixed expenses 76,000 Operating income (loss) $59,000 $77,000 38,000 20,000 38,000 $(18,000) Assuming the Fashion line is discontinued, total fixed costs remain unchanged, and the space formerly used to produce the line is rented for $29,000 per year, how will operating income be affected? OA. Increase $9,000 B. Increase $68,000 OC. Decrease $9,000 OD. Increase $127,000
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