The Clemson Company Reported the Following Results Last Year for the Manufacture

Multiple Choice

The Clemson Company reported the following results last year for the manufacture and sale of one of its products, known as a Tam:
$\begin{array}{|l|r|}\hline \text { Sales (6.500 Tams at } \$ 130 \text { each) } & \$ 845,000 \\\hline \text { Variable Cost of Sales } & \$ 390,000 \\\hline \text { Variable Distribution Costs } & \$ 65,000 \\\hline \text { Fixed Adertising Expense } & \$ 275,000 \\\hline \text { Salary of Product Line Manager } & \$ 25,000 \\\hline \text { Fixed Manufacturing Overhead } & \$ 145,000 \\\hline \text { Operating Income (Loss) } & \$ \$ 55,000) \\\hline\end{array}$ Clemson Company is trying to determine whether to discontinue the manufacture and sale of Tams. The operating results reported above for last year are expected to continue in the foreseeable future if the product is not dropped. The fixed manufacturing overhead represents the costs of production facilities and equipment that the Tam product shares with other products produced by Clemson. If the Tam product were discontinued, there would be no change in the fixed manufacturing costs of the company.
-Assume that discontinuing the manufacture and sale of Tams will have no effect on the sale of other product lines.If the company discontinues the Tam product line,what will be the change in the annual operating income (loss) ?

A) $55,000 decrease.
B) $65,000 decrease.
C) $70,000 increase.
D) $90,000 decrease.