Macaulay Roller Skates has three product

lineslong dashD,

E, and F. The following information is available:

	D	E	F
Sales revenue	$70,000	$60,000	$31,000
Variable costs	(20,000)	(15,000)	(10,000)
Contribution margin	$50,000	$45,000	21,000
Fixed costs	(20,000)	(5,000)	(23,000)
Operating income (loss)	$30,000	$40,000	$(2,000)

The company is deciding whether to drop product line F because it has an operating loss. Assuming fixed costs are unavoidable, if Macaulay drops product line F and does not replace it, what effect will this have on operating income?

A.

Operating income will increase

$2,000.

B.

Operating income will decrease

$21,000.

C.

Operating income will increase

$21,000.

D.

Operating income will increase

$23,000.