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Westfall Watches has two product lines: Luxury watches and Sporty watches. Income statement data for the most recent year follow: ? Total Luxury Sporty Sales
Westfall Watches has two product lines: Luxury watches and Sporty watches. Income statement data for the most recent year follow:
? | Total | Luxury | Sporty |
Sales revenue | $490,000 | $360,000 | $130,000 |
Variable expenses | 359,000 | 235,000 | 124,000 |
Contribution margin | 131,000 | 125,000 | 6000 |
Fixed expenses | 76,000 | 38,000 | 38,000 |
Operating income (loss) | $55,000 | $87,000 | -$32,000 |
Assuming fixed costs remain unchanged, how would discontinuing the Sporty line affect operating income?
Increase in total operating income of $49,000 | ||
Decrease in total operating income of $6000 | ||
Increase in total operating income of $130,000 | ||
Decrease in total operating income of $131,000 |
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