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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 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 357,000 235,000 122,000 Contribution margin 133,000 125,000 8,000 Fixed expenses 76,000 38,000 38,000 Operating income (loss) $57,000 $87,000 $(30,000) Assuming fixed costs remain unchanged, how would discontinuing the Sporty line affect operating income? A. Decrease in total operating income of $133,000 OB. Decrease in total operating income of $8,000 C. Increase in total operating income of $49,000 OD. Increase in total operating income of $130,000
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