Cambridge Roller Skates has three product lineslong dash

D, E, and F. The following information isavailable:

D E F

Sales revenue $70,000 $50,000 $30,000

Variable costs (30,000) (10,000) (12,000)

Contribution margin $40,000 $40,000 $18,000

Fixed costs (20,000) (5,000) (25,000)

Operating income(loss) $20,000 $35,000 $(7,000)

The company is deciding whether to drop product line F because it has an operating loss. Assume that$21,000 of total fixed costs could be eliminated by dropping F. What effect would this decision have on operatingincome?

A.

Operating income will decrease by$3,000.

B.

Operating income will decrease by$25,000.

C.

Operating income will increase by$3,000.

D.

Operating income will increase by$25,000.