Use the information below to answer the following question(s) :
Westfall Watches has two product lines: Luxury watches and Sporty watches. Income statement data for the most recent year follow:
-Assuming the Sporty line is discontinued, total fixed costs remain unchanged, and the space formerly used to produce the Sporty line is used to increase the production of Luxury watches by 250%, how will operating income be affected?
Definitions:
Futures Price
The agreed-upon price for a futures contract, which is a legal agreement to buy or sell a particular commodity or asset at a predetermined price at a specified time in the future.
Annual Risk-free Rate
The return on investment expected from a risk-free asset over a one-year period.
Futures Price
The agreed price for the future delivery of an asset in a futures contract market.
Spot Exchange Rate
The current exchange rate at which one currency can be traded for another immediately.
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