QUESTION 33

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	$500,000	$360,000	$140,000
Variable expenses	375,000	255,000	120,000
Contribution margin	125,000	105,000	20,000
Fixed expenses	80,000	40,000	40,000
Operating income (loss)	$40,000	$65,000	-$20,000

If $30,000 of fixed costs will be eliminated by discontinuing the Fashion line, how will operating income be affected?

		Decrease $49,000
		Increase $10,000
		Increase $99,000
		Increase $54,000