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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
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 $490,000 364,000 126,000 76,000 $50,000 Luxury $360,000 235,000 125,000 38,000 $87,000 Sporty $130,000 129,000 1,000 38,000 $(37,000) Assuming fixed costs remain unchanged, how would discontinuing the Sporty line affect operating income? A. Decrease in total operating income of $126,000 B. Decrease in total operating income of $1,000 C. Increase in total operating income of $49,000 D. Increase in total operating income of $130,000
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