Boots Plus Has Two Product Lines: Hiking Boots and Fashion

Multiple Choice

Boots Plus has two product lines: Hiking boots and Fashion boots. Income statement data for the most recent year follow: Assuming the Fashion line is discontinued, total fixed costs remain unchanged, and the space formerly used to produce the Fashion line is used to increase the production of Hiking boots by 250%, how will operating income be affected?

A) Increase $92,500
B) Increase $265,000
C) Increase $110,500
D) Decrease $92,500