The Following Product Line Information Is for the Swiss Watch

question 11

Essay

The following product line information is for the Swiss Watch Company.The company is considering dropping its Children's product line due to poor operating income performance.Fixed expenses are allocated to each product line based on sales revenue.
$\begin{array}{lrr}&&\text { Watch Products }\\&\text { Men's}&\text { Women's }&\text {Children's }\\ \text {Sales } &\$30,000&\$50,000&\$40,000\\ \text { Variable expenses} &10,000&15,000&25,000\\ \text { Fixed expenses } &\underline{15,000}&\underline{25,000}&\underline{20,000}\\ \text { Operating income } &\underline{\$5,000}&\underline{\$10,000}&\underline{\$(5,000)}\\\end{array}$
(a.)Calculate the effect on the Swiss Company's operating income if the Children's watch product line is discontinued.Comment on your analysis.
(b.)Assume that Swiss Company discontinues its Children's product line.Calculate the total operating income for the Swiss Company.

---

Definitions:

Intermittent

Occurring at irregular intervals; not continuous or steady, often used to describe symptoms or occurrences that start and stop over a period of time.

Scheduled Times

Prearranged periods designated for specific events or tasks to occur.

Anxiety

A psychological condition marked by intense apprehension, nervousness, or dread that significantly disrupts everyday functions.

Physiological Signs

Observable or measurable indications of the body's condition or response to environmental or internal stimuli, often related to health status.