Westfall Watches has two product lines: Luxury watches and Sporty watches. Income statement data for the most recent year follow: Sales revenue -Variable expenses -Contribution margin - Fixed expenses O $22,000 $81,000 Sporty O $119,000 O $49,000 $130,000 -120.000 -10,000 -38.000 Luxury $360,000 -235.000 -125,000 -38.000 Total -$87,000 $490,000 Operating income (loss) $-28.000 Assuming the Sporty line is discontinued, total fixed costs remain unchanged and will continue, and the space formerly used ta produce the line is rented for $32,000 per year, what will be the new net operating income? -355,000 -135,000 -76.000 -$59.000
Westfall Watches has two product lines: Luxury watches and Sporty watches. Income statement data for the most recent year follow: Sales revenue -Variable expenses -Contribution margin - Fixed expenses O $22,000 $81,000 Sporty O $119,000 O $49,000 $130,000 -120.000 -10,000 -38.000 Luxury $360,000 -235.000 -125,000 -38.000 Total -$87,000 $490,000 Operating income (loss) $-28.000 Assuming the Sporty line is discontinued, total fixed costs remain unchanged and will continue, and the space formerly used ta produce the line is rented for $32,000 per year, what will be the new net operating income? -355,000 -135,000 -76.000 -$59.000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Westfall Watches has two product lines: Luxury watches and Sporty watches. Income statement data for the most recent year
follow:
Sales revenue
-Variable expenses
Contribution margin
-Fixed expenses
$22,000
$81,000
$119,000
Sporty
$49,000
$130,000 $360,000
-120,000
=10,000
Luxury
-38,000
-235,000
-125,000
-38,000
Total
=$87,000
$490.000
=Operating income (loss)
$-28,000
Assuming the Sporty line is discontinued, total fixed costs remain unchanged and will continue, and the space formerly used to
produce the line is rented for $32,000 per year, what will be the new net operating income?
-355,000
=135,000
-76,000
=$59,000
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