Westfall Watches has two product lines: Luxury watches and Sporty watches. Income statement data for the most recent year is as follows:| | Total | Luxury | Sporty ||------------------------|----------|---------|---------|| Sales revenue | $530,000 | $400,000| $130,000|| Variable expenses | 375,000 | 255,000 | 120,000 || Contribution margin | 155,000 | 145,000 | 10,000 || Fixed expenses | 80,000 | 40,000 | 40,000 || Operating income (loss)| $75,000 | $105,000| $(30,000)|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?Select one:- A. Increase $282,500- B. Increase $362,500- C. Increase $207,500- D. Decrease $207,500

Incremental Analysis :— This analysis shows the comparison between two different alternatives. A comparison is made by deducting Alternative 1 from Alternative 2. Incremental revenue is the difference between revenues of different alternatives. Incremental cost is the difference between the costs of different alternatives.Total Contribution Margin for Luxury after Discontinuing Sporty Division [145,000+($145,000*250%)]$507,500Less :— Fixed Cost of Luxury Division ($40,000)Less :— Unavoidable Fixed Cost ($40,000)Net Income After Discounting Sporty Division $427,500Add :— Contribution Margin of Sporty Division $10,000Less :— Operating Income Before Such Change ($75,000)Increase in Net Operating Income $362,500REQUIREMENT # :— FINAL ANSWERRequirement #1 :— Operating Income Increased By $362,500So, The Correct Option is #B - $362,500

Business

Accounting

។ 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 Operating income (loss) Total $530,000 375,000 155,000 80,000 $75,000 Select one: O A. Increase $282,500 OB. Increase $362,500 O C. Increase $207,500 O D. Decrease $207,500 Luxury $400,000 255,000 145,000 40,000 $105,000 Sporty $130,000 120,000 10,000 40,000 $(30,000) 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?

។ 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 Operating income (loss) Total $530,000 375,000 155,000 80,000 $75,000 Select one: O A. Increase $282,500 OB. Increase $362,500 O C. Increase $207,500 O D. Decrease $207,500 Luxury $400,000 255,000 145,000 40,000 $105,000 Sporty $130,000 120,000 10,000 40,000 $(30,000) 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?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

A
A company shows you the following data: Sales Costs: Variable costs Fixed costs Total costs Income (loss) Product Data O $20,000 decrease O $30,000 increase O $30,000 decrease O $20,000 increase F Product G Total $300,000 $210,000 $340,000 $850,000 $180,000 $180,000 $220,000 $580,000 50,000 50,000 40,000 140,000 $230,000 $230,000 $260,000 $720,000 $ 70,000 $(20,000) $ 80,000 $130,000 Management is considering the discontinuance of the manufacture and sale of Product G at the beginning of the current year. The discontinuance would have no effect on the total fixed costs and expenses or on the sales of Products F and H. How much would net income for the current year change if they discontinue Product G?
7. Boone Corporation's income statement for the most recent month is given below. Company Store G Store H Sales 150,000 60,000 90,000 Variable expenses 60,000 30,000 30,000 Contribution margin 90,000 30,000 60,000 Traceable fixed expenses 60,000 15,000 45,000 Division segment margin 30,000 15,000 15,000 Common fixed expenses 10,000 Net operating income $20,000 Store H sales will increase by $15,000 with no change in fixed costs. What is the new division segment margin for Store H? Group of answer choices $35,000 $25,000 $40,000 $50,000
Assume a retailing company has two departments-Department A and Department B. The company's most recent contribution format income statement follows: Total Department A Department B $ 800,000 350,000 450,000 $ 350,000 250,000 Sales $ 450,000 Variable expenses Contribution margin 100,000 100,000 350,000 Fixed expenses 400,000 140,000 260,000 Net operating income (loss) $ 50,000 $ (40,000) $ 90,000 The company says that $60,000 of the fixed expenses being charged to Department A are sunk costs or allocated costs that will continue if the segment is discontinued. However, if Department A is discontinued the sales in Department B will drop by 18%. What is the financial advantage (disadvantage) of discontinuing Department A? Multiple Choice $(103,000) $(83,000) $(92,000) $(101,000)
Swifty, Inc. reports the following financial information for its sports clothing segment.Average operating assets$3,056,000Controllable margin$641, 760 Minimum rate of return7 % Compute the return on investment and the residual income for the segment. Return on investment % Residual income
Sw.
Kk.1. Subject :- Account
A1 please help.....
Required information [The following information applies to the questions displayed below.] Westerville Company reported the following results from last year's operations: Sales Variable expenses Contribution margin Fixed expenses $ 1,600,000 700,000 900,000 660,000 Net operating income $4 240,000 Average operating assets $ 1,000,000 At the beginning of this year, the company has a $325,000 investment opportunity with the characteristics: Sales Contribution margin ratio Fixed expenses $ 520,000 70 % of sales $ 312,000 The company's minimum required rate of return is 15%. 9. If the company pursues the investment opportunity and otherwise performs the same as last year, wha (Round your percentage answer to 1 decimal place (i.e., 0.1234 should be considered as 12.3%.)) ROI % ( Prev 1O Pr Ps to search RELS
Required information Skip to question [The following information applies to the questions displayed below.] Westerville Company reported the following results from last year's operations: Sales $ 1,500,000 Variable expenses 730, 000 Contribution margin 770, 000 Fixed expenses 470,000 Net operating income $ 300,000 Average operating assets $ 937,500 At the beginning of this year, the company has a $362, 500 investment opportunity with the following cost and revenue characteristics: Sales $ 580,000 Contribution margin ratio 70% of sales Fixed expenses $ 319,000 The company's minimum required rate of return is 10%. 8. If the company pursues the investment opportunity and otherwise performs the same as last year, what turnover will it earn this year? (Round your answer to 2 decimal places.)
ss
Q.33. pretax income for their company was $1956 M last year. sales rev. and COGS for the company was $5586 M and & $2215 M. How kuch would sales/marketing need to increase sales to gave the same effect as reducing cogs by 4%