Vestfall Watches has two product lines: Luxury watches and Sporty watches. Income statement data for the most recent year follow: Sporty $130,000 120,000 10,000 40,000 $(30,000) Sales revenue Variable expenses Contribution margin Fixed expenses Operating income (loss) 0 0 0 A. Decrease $237,500 Assuming the Sporty line is discontinued, total fixed costs remain unchanged, and the space formerly used to produce the Sporty line is used to increase the production of Luxury watches by 250%. how will operating income be affected? OB. Increase $332,500 OC. Increase $412,500 OD. Increase $237,500 Total $530,000 355,000 + 175,000 80,000 $95,000 Luxury $400,000 235,000 165,000 40,000 $125,000 CES
Vestfall Watches has two product lines: Luxury watches and Sporty watches. Income statement data for the most recent year follow: Sporty $130,000 120,000 10,000 40,000 $(30,000) Sales revenue Variable expenses Contribution margin Fixed expenses Operating income (loss) 0 0 0 A. Decrease $237,500 Assuming the Sporty line is discontinued, total fixed costs remain unchanged, and the space formerly used to produce the Sporty line is used to increase the production of Luxury watches by 250%. how will operating income be affected? OB. Increase $332,500 OC. Increase $412,500 OD. Increase $237,500 Total $530,000 355,000 + 175,000 80,000 $95,000 Luxury $400,000 235,000 165,000 40,000 $125,000 CES
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Westfall Watches has two product lines: Luxury watches and Sporty watches. Income statement data for the most recent year follow:
Total
Sporty
$530,000
$130,000
355,000
120,000
10,000
175,000
80,000
40,000
$95,000
$(30,000)
Sales revenue
Variable expenses
Contribution margin
Fixed expenses
Operating income (loss)
A. Decrease $237,500
B. Increase $332,500
OC. Increase $412,500
OD. Increase $237,500
Luxury
$400,000
Assuming the Sporty line is discontinued, total fixed costs remain unchanged, and the space formerly used to produce the Sporty line is used to increase the production of Luxury watches by 250%.
how will operating income be affected?
0000
235,000
165,000
40,000
$125,000
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