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How will operating income be affected

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Question - Boots Plus has two product lines: Hiking boots and Fashion boots. Income statement data for the most recent year follow:

Total Hiking Fashion

Sales revenue $480,000 $340,000 $140,000

Variable expenses 355,000 235,000 120,000

Contribution margin 125,000 105,000 20,000

Fixed expenses 76,000 38,000 38,000

Operating income (loss) $49,000 $67,000 $(18,000)

Assuming the Fashion line is discontinued, total fixed costs remain unchanged, and the space formerly used to produce the Fashion line is used to increase the production of Hiking boots by an additional 250%, how will operating income be affected?

Reference no: EM131817239

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