Sole Sisters Company has two product lines: Hiking boots and Fashion boots. Income statement data for...
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Sole Sisters Company has two product lines: Hiking boots and Fashion boots. Income statement data for the most rec year follow: Sales revenue Variable expenses Contribution margin Fixed expenses Operating income (loss) Total $510,000 355,000 155,000 79,000 $76,000 Hiking $370,000 235,000 135,000 39,500 $95,500 ***** Fashion $140,000 120,000 20,000 39,500 $(19,500) If $29,000 of fixed costs will be eliminated by discontinuing the Fashion line, how will operating income be affected? Show your work, calculate the amount, and state whether this is an increase or decrease. Sole Sisters Company has two product lines: Hiking boots and Fashion boots. Income statement data for the most rec year follow: Sales revenue Variable expenses Contribution margin Fixed expenses Operating income (loss) Total $510,000 355,000 155,000 79,000 $76,000 Hiking $370,000 235,000 135,000 39,500 $95,500 ***** Fashion $140,000 120,000 20,000 39,500 $(19,500) If $29,000 of fixed costs will be eliminated by discontinuing the Fashion line, how will operating income be affected? Show your work, calculate the amount, and state whether this is an increase or decrease.
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