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 | $366,000 | $235,000 | $131,000 |
| Contribution margin | $114,000 | $105,000 | $9,000 |
| Fixed expenses | $76,000 | $38,000 | $38,000 |
| Operating income(loss) | $38,000 | $67,000 | $(29,000) |
Assuming fixed costs remain unchanged, how would discontinuing the Fashion line affect operating income?
A.
Increase in total operating income of $29,000
B.
Increase in total operating income of $114,000
C.
Decrease in total operating income of $9,000
D.
Decrease in total operating income of $140,000
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