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Westfall Watches has two product lines: Luxury watches and Sporty watches. Income statement data for the most recent year follow: Sales revenue -Variable expenses -Contribution margin - Fixed expenses O $22,000 $81,000 Sporty O $119,000 O $49,000 $130,000 -120.000 -10,000 -38.000 Luxury $360,000 -235.000 -125,000 -38.000 Total -$87,000 $490,000 Operating income (loss) $-28.000 Assuming the Sporty line is discontinued, total fixed costs remain unchanged and will continue, and the space formerly used ta produce the line is rented for $32,000 per year, what will be the new net operating income? -355,000 -135,000 -76.000 -$59.000

Westfall Watches has two product lines: Luxury watches and Sporty watches. Income statement data for the most recent year follow: Sales revenue -Variable expenses -Contribution margin - Fixed expenses O $22,000 $81,000 Sporty O $119,000 O $49,000 $130,000 -120.000 -10,000 -38.000 Luxury $360,000 -235.000 -125,000 -38.000 Total -$87,000 $490,000 Operating income (loss) $-28.000 Assuming the Sporty line is discontinued, total fixed costs remain unchanged and will continue, and the space formerly used ta produce the line is rented for $32,000 per year, what will be the new net operating income? -355,000 -135,000 -76.000 -$59.000

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Westfall Watches has two product lines: Luxury watches and Sporty watches. Income statement data for the most recent year follow: Sales revenue -Variable expenses Contribution margin -Fixed expenses $22,000 $81,000 $119,000 Sporty $49,000 $130,000 $360,000 -120,000 =10,000 Luxury -38,000 -235,000 -125,000 -38,000 Total =$87,000 $490.000 =Operating income (loss) $-28,000 Assuming the Sporty line is discontinued, total fixed costs remain unchanged and will continue, and the space formerly used to produce the line is rented for $32,000 per year, what will be the new net operating income? -355,000 =135,000 -76,000 =$59,000
Transcribed Image Text:Westfall Watches has two product lines: Luxury watches and Sporty watches. Income statement data for the most recent year follow: Sales revenue -Variable expenses Contribution margin -Fixed expenses $22,000 $81,000 $119,000 Sporty $49,000 $130,000 $360,000 -120,000 =10,000 Luxury -38,000 -235,000 -125,000 -38,000 Total =$87,000 $490.000 =Operating income (loss) $-28,000 Assuming the Sporty line is discontinued, total fixed costs remain unchanged and will continue, and the space formerly used to produce the line is rented for $32,000 per year, what will be the new net operating income? -355,000 =135,000 -76,000 =$59,000
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