Housewares Corporation has two product lines: cups and pitchers. Income statement data for the most...
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Housewares Corporation has two product lines: cups and pitchers. Income statement data for the most recent year follow: Total Cups Pitchers Sales revenue $460,000 $310,000 $150,000 Variable expenses 355,000 235,000 120,000 Contribution margin 105,000 75,000 30,000 Fixed expenses 76,000 38,000 38,000 Operating income (loss) $29,000 $37,000 $(8,000) Assuming the Pitcher line is dropped, total fixed costs remain unchanged, and the space formerly used to produce the line is rented for $45,000 per year, how will operating income be affected?
A. Decrease $15,000
B. Increase $167,000
C. Increase $44,000
D. Increase $15,000
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