Westfall Watches has two product lines: Luxury watches and Sporty watches. Income statement data for the most recent year follow: Sales revenue Variable expenses Contribution margin Fixed expenses Operating income (loss) Total $500,000 355,000 145,000 81,000 $64,000 Luxury $370,000 235,000 135,000 40,500 $94,500 Sporty $130,000 120,000 10,000 40,500 $(30,500) Assuming the Sporty line is discontinued, total fixed costs remain unchanged, and the space formerly used to produce the Sporty line is used to increase the production of Luxury watches by 250%, how will operating income be affected? A. Increase $192,500 B. Increase $337,500 C. Increase $256,500 D. Decrease $192,500 The Porch Cushion Company manufactures foam cushions. The number of cushions to be produced in the upcoming three months follows: Number of foam cushions to be produced in July Number of foam cushions to be produced in August Number of foam cushions to be produced in September 12,000 18,000 13,000 Each cushion requires 4 pounds of the foam used as stuffing. The company has a policy that the ending inventory of foam each month must be equal to 20% of the following month's expected production needs. How many pounds of foam does The Porch Cushion Company need to purchase in August? A. 86,400 B. 57,600 C. 82,400 D. 68,000 Distribution Corporation collects 55% of a month's sales in the month of sale, 40% in the month following sale, and 5% in the second month following sale. Budgeted sales for the upcoming four months are: April budgeted sales May budgeted sales June budgeted sales July budgeted sales $150,000 $110,000 $290,000 $190,000 The amount of cash that will be collected in July is budgeted to be A. $121,500 B. $226,000 C. $104,500 D. $186,000