HiTech Manufactures Two Products: Regular and Super

Multiple Choice

HiTech manufactures two products: Regular and Super. The results of operations for 20x1 follow. Fixed manufacturing costs included in cost of goods sold amount to $3 per unit for Regular and $20 per unit for Super. Variable selling expenses are $4 per unit for Regular and $20 per unit for Super; remaining selling amounts are fixed.
HiTech wants to drop the Regular product line. If the line is dropped, company-wide fixed manufacturing costs would fall by 10% because there is no alternative use of the facilities. What would be the impact on operating income if Regular is discontinued?

A) $0.
B) $10,400 increase.
C) $20,000 increase.
D) $39,600 decrease.
E) None of the other answers are correct.