Reference no: EM132510196

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)

Question 1: Assuming fixed costs remain unchanged, how would discontinuing the Fashion line affect operating income?

Select one:

a. Increase in total operating income of $29,000
b. Increase in total operating income of $132,000
c. Decrease in total operating income of $78,000
d. Decrease in total operating income of $20,000