A Study Has Been Conducted to Determine If Product a Should

Multiple Choice

A study has been conducted to determine if Product A should be dropped.Sales of the product total $200,000 per year;variable expenses total $140,000 per year.Fixed expenses charged to the product total $90,000 per year.The company estimates that $40,000 of these fixed expenses will continue even if the product is dropped.These data indicate that if Product A is dropped,the company's overall net operating income would:

A) decrease by $20,000 per year
B) increase by $20,000 per year
C) decrease by $10,000 per year
D) increase by $30,000 per year