6 Please put correct answer in the underlined space provided. ABC Company makes and sells two products, X and Y, The income statement for last year was as follows: 10 Product X Product Y 12 13 14 15 16 Operating income 17 18 19 Variable cost Fixed Overhead Variable selling and administrative expenses Fixed selling and administrative expenses 152,000 168,000 80,000 56,000 35,920 16,800 40,000 (20,720) 48,000 40,000 12,800 11,200 The fixed costs are unavoidable and are allocated to products on the basis of sales revenue. When the president saw the income statement, he decided that the company should drop Product Y. If Product Y is dropped, the company's cost structure will remain the same and sales of Product X are expected to increase by 21 70% Required: 24 a) Compute the change in annual operating income if Product Y is 25 (7 Marks) discontinued and only Product X is sold. 28 29 31 32 34