Accelerate Rollerblades Has Three Product Lines-D,E,and F The Company Is Deciding Whether to Drop Product Line F

Multiple Choice

Accelerate Rollerblades has three product lines-D,E,and F.The following information is available: $$\begin{array} { | l | l | r | c | } \hline & \text { D } & \text { E } & \text { F } \\\hline \text { Sales revenue } & \$ 90,000 & \$ 60,000 & \$ 31,000 \\\hline \text { Variable costs } & ( 20,000 ) & ( 15,000 ) & ( 11,000 ) \\\hline \text { Contribution margin } & \$ 70,000 & \$ 45,000 & \$ 20,000 \\\hline \text { Fixed costs } & ( 20,000 ) & ( 5000 ) & ( 24,000 ) \\\hline \text { Operating income (loss) } & \$ 50,000 & \$ 40,000 & \$ ( 4000 ) \\\hline\end{array}$$ The company is deciding whether to drop product line F because it has an operating loss.Assume that $15,000 of total fixed costs could be eliminated by dropping F.What effect would this decision have on operating income?

A) Operating income will increase by $35,000.
B) Operating income will increase by $20,000.
C) Operating income will decrease by $5000.
D) Operating income will decrease by $15,000.