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

question 91

Multiple Choice

Use the information below to answer the following question(s) :
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 $137,500
• B) Increase $235,500
• C) Increase $186,500
• D) Decrease $137,500

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Definitions:

Limited Knowledge

The state of having restricted information or understanding about a subject or situation, emphasizing incomplete or finite expertise.

Behavioral Economists

Behavioral economists study the effects of psychological, cognitive, emotional, cultural, and social factors on the economic decisions of individuals and institutions and how those decisions vary from those implied by classical economics.

Endowment Effect

The phenomenon where people ascribe more value to things merely because they own them, often leading to a discrepancy between buying and selling prices.

Raffle Prize

A reward given to the winner(s) of a raffle, which is a form of lottery or contest.