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Sole Brother Company 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 Total $510,000 355,000 155,000 81,000 Hiking $370,000 235,000 135,000 40,500 Fashion $140,000 120,000 20,000 40,500

Sole Brother Company 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 Total $510,000 355,000 155,000 81,000 Hiking $370,000 235,000 135,000 40,500 Fashion $140,000 120,000 20,000 40,500

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Sole Brother Company 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 $510,000 355,000 155,000 81,000 $74,000 Hiking $370,000 235,000 135,000 40,500 $94,500 Fashion $140,000 120,000 20,000 40,500 -$20,500 If $30,000 of fixed costs will be eliminated by discontinuing the Fashion line, analyse how its operating income would be affected. Support your answer with explanation.
Transcribed Image Text:Sole Brother Company 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 $510,000 355,000 155,000 81,000 $74,000 Hiking $370,000 235,000 135,000 40,500 $94,500 Fashion $140,000 120,000 20,000 40,500 -$20,500 If $30,000 of fixed costs will be eliminated by discontinuing the Fashion line, analyse how its operating income would be affected. Support your answer with explanation.
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