Rambo Company Has Three Products,A,B,and C Rambo Company Is Thinking of Dropping Product C Because It

Multiple Choice

Rambo Company has three products,A,B,and C.The following information is available: $\begin{array}{lrrr}&\text { Product A }&\text { Product B }&\text { Product C }\\\text { Sales } & \$ 60,000 & \$ 90,000 & \$ 24,000 \\\text { Variable costs } & 36,000 & 48,000 & 15,000 \\\text { Contribution margin } & 24,000 & 42,000 & 9,000 \\\text { Fixed costs: } & & &\\\text { Avoidable } & 6,000 & 15,000 & 4,000 \\\text { Unavoidable } & 7,000 & 9,000 & 5,400 \\\text { Operating income } & \$ 11,000 & \$ 18,000 & \$(400) \end{array}$ Rambo Company is thinking of dropping Product C because it is reporting a loss.Assuming Rambo drops Product C and does NOT replace it,operating income will ________.

A) increase by $400
B) increase by $4,000
C) decrease by $5,000
D) decrease by $9,400