Balser Company Manufactures and Sells a Product Called JYMP -Balser Anticipates No Change in the Operating Results for JYMP

Multiple Choice

Balser Company manufactures and sells a product called JYMP. Results of last year for the manufacture and sale of JYMP's are as follows: $\begin{array}{lrr} \text { Sales ( \( 8,000 . J Y M P \) s at \( £ 120 \) each) . } &£ 960,000\\ \text { Less costs: } &\\ \text { Variable production costs. } &464,000\\ \text { Sales commissions (15\% of sales) . } &144,000\\ \text { Salary of product line manager.} &100,000\\ \text { Fixed product line advertising. } &160,000\\ \text { Fixed manutacturing overhead.} &132,000\\ \text { Total costs. } &1,000,000\\ \text {Net operating loss. } &£(40,000) \\\end{array}$

-Balser anticipates no change in the operating results for JYMP in the foreseeable future. Balser is reexamining all of its product lines and is trying to decide whether or not to discontinue the manufacture and sale of JYMPs. Total fixed manufacturing overhead costs would not be affected by a decision to drop any one product line. Assume that discontinuing the manufacture and sale of JYMPs will have no effect on other product lines. If the company discontinues the JYMP product line, the change in annual operating income due to this decision will be a

A) £40,000 increase.
B) £132,000 decrease.
C) £92,000 decrease.
D) £172,000 decrease.