Boots Plus has two product lines: Hiking boots and Fashion boots. Income statement data for the most recent year follow: Total Hiking Fashion Sales revenue $480,000 $340,000 $140,000 Variable expenses $385,000 265,000 120,000 Contribution margin 95,000 75,000 20,000 Fixed expenses 77,000 38,500 38,500 Operating income (loss) $18,000 $36,500 $(18,500)Assuming the Fashion line is discontinued, total fixed costs remain unchanged, and the space formerly used to produce the Fashion line is used to increase the production of Hiking boots by 250%, how will operating income be affected? Question 33 options: Increase $92,500 Increase $110,500 Increase $265,000 Decrease $92,500
Boots Plus has two product lines: Hiking boots and Fashion boots. Income statement data for the most recent year follow: Total Hiking Fashion Sales revenue $480,000 $340,000 $140,000 Variable expenses $385,000 265,000 120,000 Contribution margin 95,000 75,000 20,000 Fixed expenses 77,000 38,500 38,500 Operating income (loss) $18,000 $36,500 $(18,500)Assuming the Fashion line is discontinued, total fixed costs remain unchanged, and the space formerly used to produce the Fashion line is used to increase the production of Hiking boots by 250%, how will operating income be affected? Question 33 options: Increase $92,500 Increase $110,500 Increase $265,000 Decrease $92,500
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Boots Plus has two product lines: Hiking boots and Fashion boots. Income statement data for the most recent year follow:
Assuming the Fashion line is discontinued, total fixed costs remain unchanged, and the space formerly used to produce the Fashion line is used to increase the production of Hiking boots by 250%, how will operating income be affected?
| | Total | Hiking | Fashion |
| Sales revenue | $480,000 | $340,000 | $140,000 |
| Variable expenses | $385,000 | 265,000 | 120,000 |
| Contribution margin | 95,000 | 75,000 | 20,000 |
| Fixed expenses | 77,000 | 38,500 | 38,500 |
| Operating income (loss) | $18,000 | $36,500 | $(18,500) |
Question 33 options:
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Increase $92,500
|
|
|
Increase $110,500
|
|
|
Increase $265,000
|
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|
Decrease $92,500
|
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