QUESTION 17

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

   	Total	Hiking	Fashion
   Sales revenue	$480,000	$340,000	$140,000
   Variable expenses	355,000	235,000	120,000
   Contribution margin	125,000	105,000	20,000
   Fixed expenses	76,000	38,000	38,000
   Operating income (loss)	$49,000	$67,000	$(18,000)

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

   		Decrease by $45,000
   		Increase by $18,000
   		Decrease $54,000
   		Increase by $5,000
   		Increase by $53,000