Westfall Watches has two product lines: Luxury watches and Sporty watches. Income statement data for the most recent year follow: Assuming the Sporty line is discontinued, total fixed costs remain unchanged, and the space formerly used to produce the Sporty line is used to increase the production of Luxury watches by 250%, how will operating income be affected?

Question

Westfall Watches has two product lines: Luxury watches and Sporty watches. Income statement data for the most recent year follow:  Assuming the Sporty line is discontinued, total fixed costs remain unchanged, and the space formerly used to produce the Sporty line is used to increase the production of Luxury watches by 250%, how will operating income be affected?

Quizplus · Accepted Answer

The Answer of Westfall Watches has two product lines: Luxury watches and Sporty watches. Income statement data for the most recent year follow:  Assuming the Sporty line is discontinued, total fixed costs remain unchanged, and the space formerly used to produce the Sporty line is used to increase the production of Luxury watches by 250%, how will operating income be affected?

Westfall Watches Has Two Product Lines: Luxury Watches and Sporty