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Footwear company has two product lines: Hiking boots and Fashion boots. Income statement data for the most recent year follow: Sales revenue Variable expenses
Footwear company has two product lines: Hiking boots and Fashion boots. Income statement data for the most recent year follow: Sales revenue Variable expenses Contribution margin Fixed expenses Operating income (loss) Total $480,000 Hiking $340,000 Fashion $140,000 371,000 235,000 136,000 109,000 105,000 4,000 76,000 38,000 38,000 $33,000 $67,000 $(34,000) 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 $109,000 C. Decrease in total operating income of $4,000 D. Decrease in total operating income of $140,000
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