Question
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
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 | 350,000 | 235,000 | 115,000 |
Contribution margin | 140,000 | 125,000 | 15,000 |
Fixed expenses | 76,000 | 38,000 | 38,000 |
Operating income (loss) | $64,000 | $87,000 | $(23,000) |
Assuming fixed costs remain unchanged, how would discontinuing the Sporty line affect operating income?
A. Increase in total operating income of $130,000
B. Decrease in total operating income of $140,000
C. Decrease in total operating income of $15,000
D. Increase in total operating income of $ 49,000
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