Westfall Watches has two product lines: Luxury watches and Sporty watches. Income statement data for...
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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? A. Increase $69,000 B. Increase $10,000 C. Increase $128,000 D. Decrease $30,000
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