Sole Sisters 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 $480,000 Hiking $340,000 Fashion $140,000 369,000 235,000 134,000 111,000 105,000 6,000 76,000 38,000 38,000 $35,000 $67,000 $(32,000) Assuming fixed costs remain unchanged, how would discontinuing the Fashion line affect operating income? A. Increase in total operating income of $29,000 OB. Increase in total operating income of $111,000 OC. Decrease in total operating income of $140,000 OD. Decrease in total operating income of $6,000
Sole Sisters 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 $480,000 Hiking $340,000 Fashion $140,000 369,000 235,000 134,000 111,000 105,000 6,000 76,000 38,000 38,000 $35,000 $67,000 $(32,000) Assuming fixed costs remain unchanged, how would discontinuing the Fashion line affect operating income? A. Increase in total operating income of $29,000 OB. Increase in total operating income of $111,000 OC. Decrease in total operating income of $140,000 OD. Decrease in total operating income of $6,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Give me correct answer with explanation.j
Transcribed Image Text:Sole Sisters 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
$480,000
Hiking
$340,000
Fashion
$140,000
369,000
235,000
134,000
111,000
105,000
6,000
76,000
38,000
38,000
$35,000
$67,000
$(32,000)
Assuming fixed costs remain unchanged, how would discontinuing the Fashion line affect operating income?
A. Increase in total operating income of $29,000
OB. Increase in total operating income of $111,000
OC. Decrease in total operating income of $140,000
OD. Decrease in total operating income of $6,000
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