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Aqua Life Jackets,Inc Assuming Total Fixed Costs Remain Unchanged,how Would Dropping the Children's

Question 134

Multiple Choice

Aqua Life Jackets,Inc.has two product lines: adult jackets and children's jackets.Contribution margin income statement data for the most recent year follow:  Total  Adult jackets  Childiren’s jackets  Sales revenue $365,000$275,000$90,000 Variable expenses $205,000$165,000$40,000 Cantribution margin $160,000$110,000$50,000 Fixed expenses $102,000$50,000$52,000 Operating income (loss)  $58,000$60,000$(2,000) \begin{array} { | l | r | r | r | } \hline & \text { Total } & \text { Adult jackets } & \text { Childiren's jackets } \\\hline \text { Sales revenue } & \$ 365,000 & \$ 275,000 & \$ 90,000 \\\hline \text { Variable expenses } & \$ 205,000 & \$ 165,000 & \$ 40,000 \\\hline \text { Cantribution margin } & \$ 160,000 & \$ 110,000 & \$ 50,000 \\\hline \text { Fixed expenses } & \$ 102,000 & \$ 50,000 & \$ 52,000 \\\hline \text { Operating income (loss) } & \$ 58,000 & \$ 60,000 & \$ ( 2,000 ) \\\hline\end{array} Assuming total fixed costs remain unchanged,how would dropping the children's jackets line affect operating income?


A) Increase in total operating income of $8,000
B) Increase in total operating income of $154,000
C) Decrease in total operating income of $50,000
D) Decrease in total operating income of $66,000

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