Question
Boots Plus has two product lines: Hiking boots and Fashion boots. Income statement data for the most recent year follow: Total Hiking Fashion Sales revenue
Boots Plus has two product lines: Hiking boots and Fashion boots. Income statement data for the most recent year follow:
| Total | Hiking | Fashion | |
| Sales revenue | $480,000 | $340,000 | $140,000 |
| Variable expenses | 355,000 | 235,000 | 120,000 |
| Contribution margin | 125,000 | 105,000 | 20,000 |
| Fixed expenses | 76,000 | 38,000 | 38,000 |
| Operating income (loss) | $49,000 | $67,000 | $(18,000) |
Assuming fixed costs remain unchanged, how would discontinuing the Fashion line affect operating income?
A.Increase in total operating income of $132,000
B.Decrease in total operating income of $20,000
C.Decrease in total operating income of $78,000
D.Increase in total operating income of $29,000
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Contemporary Engineering Economics
Authors: Chan S. Park
5th edition
136118488, 978-8120342095, 8120342097, 978-0136118480
