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Boots Plus has two product lines: Hiking boots and Fashion boots. Income statemer data for the most recent year follow: Sales revenue Variable expenses Contribution margin Fixed expenses Operating income (loss) Total $480,000 358,000 122,000 76,000 $46,000 Hiking $340,000 235,000 105,000 38,000 $67,000 Fashion $140,000 120,000 20,000 38,000 -$18,000 Assuming fixed costs remain unchanged, how would discontinuing the Fashion line affect operating income? Decrease in total operating income of $20,000

Boots Plus has two product lines: Hiking boots and Fashion boots. Income statemer data for the most recent year follow: Sales revenue Variable expenses Contribution margin Fixed expenses Operating income (loss) Total $480,000 358,000 122,000 76,000 $46,000 Hiking $340,000 235,000 105,000 38,000 $67,000 Fashion $140,000 120,000 20,000 38,000 -$18,000 Assuming fixed costs remain unchanged, how would discontinuing the Fashion line affect operating income? Decrease in total operating income of $20,000

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Boots Plus has two product lines: Hiking boots and Fashion boots. Income statement data for the most recent year follow: Sales revenue Variable expenses Contribution margin Fixed expenses Operating income (loss) Total Hiking $480,000 $340,000 358,000 235,000 122,000 105,000 76,000 38,000 $46,000 $67,000 Fashion $140,000 120,000 20,000 38,000 -$18,000 Assuming fixed costs remain unchanged, how would discontinuing the Fashion line 'affect operating income? Decrease in total operating income of $20,000 Increase in total operating income of $29,000 Decrease in total operating income of $17,000 Increase in total operating income of $122,000
Transcribed Image Text:Boots Plus has two product lines: Hiking boots and Fashion boots. Income statement data for the most recent year follow: Sales revenue Variable expenses Contribution margin Fixed expenses Operating income (loss) Total Hiking $480,000 $340,000 358,000 235,000 122,000 105,000 76,000 38,000 $46,000 $67,000 Fashion $140,000 120,000 20,000 38,000 -$18,000 Assuming fixed costs remain unchanged, how would discontinuing the Fashion line 'affect operating income? Decrease in total operating income of $20,000 Increase in total operating income of $29,000 Decrease in total operating income of $17,000 Increase in total operating income of $122,000
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