Question
Boots Plus has two product lines: Hiking boots and Fashion boots. Income statement data for the most recent year follow: Total Sales revenue $520,000 Hiking
Boots Plus has two product lines: Hiking boots and Fashion boots. Income statement data for the most recent year follow: Total Sales revenue $520,000 Hiking $380,000 Fashion $140,000 Variable expenses 405,000 285,000 120,000 Contribution margin 115,000 95,000 20,000 Fixed expenses 77,000 Operating income (loss) $38,000 38,500 $56,500 38,500 $(18,500) If $26,000 of fixed costs will be eliminated by discontinuing the Fashion line, how will operating income be affected? A. Increase $47,000 B. Increase $85,000 C. Decrease $47,500 D. Increase $6,000
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