Week 12 Quiz- Requires Respondus LockDown Browser-Quiz Melissa Milburn: Attempt

Question

Week 12 Quiz- Requires Respondus LockDown Browser-Quiz Melissa Milburn: Attempt 1 estion 7 (1 point) oots Plus has two product lines: Hiking boots and Fashion boots. Income statement data for the most re Fashion $140,000 Hikin $340,00 235,000 105,000 Tota $480 ales revenue ariable expenses ontribution margin Fixed expenses Operating income (loss) 125,000 20,000 $18000) Assuming fixed costs remain unchanged, how would discontinuing the Fashion line affect operating inco O Increase in total operating income of $29,000 O Increase in total operating income of $132,000 O Decrease in total operating income of $78,000 O Decrease in total operating income of $20,000

Explanation / Answer

Answer: D – Decrease in operating Income of $20,000

Calculation

Sales Revenue $ 340,000

Less : Variable Expenses ($235,000)

Contribution Margin                         $105,000

Less Fixed Expenses ($76,000)

New Net Operating Income $29,000

Less original Operating Income ($49,000)

Decrease in Operating Income ($20,000)

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