Hanson Sports Has Three Product Lines: Footballs, Basketballs, and Bats

Multiple Choice

Hanson Sports has three product lines: footballs, basketballs, and bats. Common costs are allocated based on relative sales. A product line income statement for the year ended December 31, 2014 follows:
$\begin{array}{lrrrr}&\text { Footballs }&\text {Basketballs}&\text { Bats}&\text { Total }\\\text { Sales } & \$ 600,000 & \$ 800,000 & \$ 400,000 & \$ 1,800,000 \\\text { Cost of goods sold } & 260,000 & 400,000 & 230,000 & 890,000\\\text { Gross margin } & 340,000 & 400,000 & 170,000 & 910,000 \\\text { Less other variable costs } & 85,000 & 120,000 & 80,000 & 285,000\\\text { Contribution margin } & 255,000 & 280,000 & 90,000 & 625,000 \\\text { Less direct salaries } & 50,000 & 60,000 & 45,000 & 155,000 \\\text { Less common fixed costs } & 85,000 & 100,000 & 55,000 & 240,000 \\\text { Net income }&\$120,000&\$120,000&(\$10,000) &\$230,000\end{array}$
Since the profit for bats is relatively low, the company is considering dropping this product line. What is the incremental effect of dropping bats?

A) $185,000
B) ($45,000)
C) $240,000
D) $280,000