How will operating income be affected

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Reference no: EM132086133

Question: Westfall Watches has two product lines: Luxury watches and Sporty watches. Income statement data for the most recent year follow:

Total Luxury Sporty Sales revenue $490,000 $360,000 $130,000

Variable expenses 355,000 235,000 120,000

Contribution margin 135,000 125,000 10,000

Fixed expenses 76,000 38,000 38,000

Operating income (loss) $59,000 $87,000 $(28,000)

If $20,000 of fixed costs will be eliminated by discontinuing the Sporty line, how will operating income be affected?

Reference no: EM132086133

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