Complete question 2 which includes parts E through I

E. 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	360,000	235,000	125,000
Contribution margin	120,000	105,000	15,000
Fixed expenses	76,000	38,000	38,000
Operating income (loss)	$44,000	$67,000	$(23,000)

Assuming fixed costs remain unchanged, how would discontinuing the Fashion line affect operating income?

A. Decrease in total operating income of $15,000

B. Decrease in total operating income $140,000

C. Increase in total operating income of $120,000

D. Increase in total operating income of $ 29,000

F. 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	$510,000	$370,000	$140,000
Variable expenses	395,000	275,000	120,000
Contribution margin	115,000	95,000	20,000
Fixed expenses	79,000	39,500	39,500
Operating income (loss)	$36,000	$55,500	$(19,500)

Assuming the Fashion line is discontinued, total fixed costs remain unchanged, and the space formerly used to produce the line is rented for $27,000

per year, how will operating income beaffected?

A. Increase $43,000

B.Increase $79,000

C.Decrease $7,000

D.Increase $7,000

G. Part P40 is a part used in the production of air conditioners at Jackson Corporation. The following costs and data relate to the production of Part P40:

Number of parts produced annually	24,000
Fixed costs	$40,000
Variable costs	$70,000
Total cost to produce	$110,000

Jackson Corporation can purchase the part from an outside supplier for $4.26 per unit. If they purchase from the outside supplier, 50% of the fixed costs would be avoided. If Jackson Corporation makes the part, how much will its operating income be?

A. $12,240 greater than if the company bought the part

B. $122,240 greater than if the company bought the part

C. $52,240 greater than if the company bought the part

D. $20,000 greater than if the company bought the part

H. Part P40 is a part used in the production of air conditioners at Jackson Corporation. The following costs and data relate to the production of Part P40:

Number of parts produced annually	27,000
Fixed costs	$40,000
Variable costs	$66,000
Total cost to produce	$106,000

Jackson Corporation can purchase the part from an outside supplier for $4.58 per unit. If they purchase from the outside supplier, 50% of the fixed costs would be avoided. Assume that factory space freed up by purchasing the part from an outside source can be used to manufacture another product that can be sold for $2,300 profit. If Jackson Corporation makes the part, what will its operating income be?

A. $39,960 greater than if the company bought the part

B.$35,360 greater than if the company bought the part

C. $141,360 greater than if the company bought the part

D. $35,360 less than if the company bought the part