Use the Information Below to Answer the Following Question(s)

question 65

Multiple Choice

Use the information below to answer the following question(s) :
Aqua Life Jackets, Inc. has two product lines: adult jackets and children's jackets. Contribution margin income statement data for the most recent year follow:

-Assuming the Aqua Life Jackets, Inc. children's jackets line is dropped, total fixed costs remain unchanged, and the space formerly used to produce the line is rented for $22,000 per year, how will operating income be affected?

• A) Decrease $28,000
• B) Increase $176,000
• C) Increase $28,000
• D) Increase $30,000

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Definitions:

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