Westfall Watches has two product? lines: Luxury watches and Sporty watches. Inco

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 351 comma 000 ?235,000 116 comma 000 Contribution margin 139 comma 000 ?125,000 14 comma 000 Fixed expenses ?76,000 ?38,000 ?38,000 Operating income? (loss) $ 63 comma 000 ?$87,000 $( 24 comma 000 ) Assuming fixed costs remain? unchanged, how would discontinuing the Sporty line affect operating? income?

Explanation / Answer

Loss in Contribution margin = $14000 Operating? income would decrease by $14000 by discontinuing the Sporty line

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