The Following Information Pertains to Erickson Company's Three Products Assume That Product C Is Discontinued and the Extra Space

Multiple Choice

The following information pertains to Erickson Company's three products: $\begin{array}{rrrr} & \text { A } & \text { B } & C \\\text { Unit sales per year } & 250 & 400 & 250\\\text { Selling price per unit } & \$ 9.00 & \$ 12.00 & \$ 9.00 \\\text { Variable costs per unit } & 3.60 & 9.00 & 9.90\\\text { Unit contribution margin } &\$ 5.40&\$ 3.00&\$(0.90) \\\text { Contribution margin ratio }&60\%&25\%&(10) \%\end{array}$ Assume that product C is discontinued and the extra space is rented for $300 per month.All other information remains the same as the original data.What would be the effect on annual profits?

A) Annual profits would decrease by $75.
B) Annual profits would remain the same.
C) Annual profits would increase by $75.
D) Annual profits would increase by $525.