Faros Hats, Etc

Multiple Choice

Faros Hats, Etc. has two product lines-baseball helmets and football helmets. Income statement data for the most recent year follow: Assuming the Football Helmets line is dropped, total fixed costs remain unchanged, and the space formerly used to produce the line is rented for $100,000 per year, how will operating income be affected?

A) Operating income will increase $30,000.
B) Operating income will increase $10,000.
C) Operating income will decrease $10,000.
D) Operating income will decrease $80,000.