A Company Has Three Product Lines, One of Which Reflects

Multiple Choice

A company has three product lines, one of which reflects the following results: $$\begin{array} { l r } \text { Sales } & \$ 215,000 \\\text { Variable expenses } & 125,000 \\\text { Contribution margin } & 90,000 \\\text { Fixed expenses } & 130,000 \\\text { Net loss } & \$ ( 40,000 ) \end{array}$$ If this product line is eliminated, 60% of the fixed expenses can be eliminated and the other 40% will be allocated to other product lines. If management decides to eliminate this product line, the company's net income will

A) increase by $40,000.
B) decrease by $90,000.
C) decrease by $12,000.
D) increase by $12,000.