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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 $29,000
B. Decrease in total operating income of $78,000
C. Increase in total operating income of $132,000
D. Decrease in total operating income of $20,000
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