Kim Company's western territory's forecasted income statement for the upcoming year is as follows:

Kim Company's management is considering dropping the western territory and has determined that 80% of the fixed expenses are avoidable. What is the change in Kim Company's forecasted operating loss for the upcoming year if the western territory is dropped? Assume the company predicts an operating loss across the entire company.

A) Loss will be reduced by $54,000.

B) Loss will be increased by $60,000.

C) Loss will be reduced by $480,000.

D) Loss will be increased by $384,000.

Sales Variable expenses Contribution margin Fixed expenses Operating loss $850,000 (520,000) $330,000 (480,000) ($150,000)