Boots Plus has two product lines: Hiking boots and Fashion boots.Income statement data for the most recent year follow:

If $25,000 of fixed costs will be eliminated by discontinuing the Fashion line,how will operating income be affected?

Question

Boots Plus has two product lines: Hiking boots and Fashion boots.Income statement data for the most recent year follow:

If $25,000 of fixed costs will be eliminated by discontinuing the Fashion line,how will operating income be affected?

Quizplus · Accepted Answer

A)
Contribution Margin $105,000
Less Fixed Expenses 51,000
New Net income 54,000
Less original OI 49,000
Increase in OI $5,000

Boots Plus Has Two Product Lines: Hiking Boots and Fashion