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Rainbow Brothers Inc. has two product lines: Rain coats and Snow boots. The following is data on its Income statement for the most recent
Rainbow Brothers Inc. has two product lines: Rain coats and Snow boots. The following is data on its Income statement for the most recent year Sales revenue Variable expenses Contribution margin Fixed expenses Operating income (loss) Total $480,000 Rain Coats $340,000 375,000 256,000 105,000 85,000 76,000 38,000 $29,000 $47.000 Snow Boots $140,000 120.000 20,000 30.000 $18,000) If $27,000 of fixed costs will be eliminated by discontinuing the Snow Boots line, how will operating income be affected? OA. Increase $35,000 OB. Increase $64,000 OC. Decrease $44.000 OD. Increase $7,000 CID
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