Respond to the following:

Tyler Corporation has provided you with the following budgeted income statement for one of their products:

Tyler Corporation believes that 80% of the fixed costs would be avoidable if the product line was dropped. Based on the impact of company's operating income, Tyler should not drop the product line.

Sales Variable expenses Contribution margin Fixed expenses Operating income $750,000 500,000 $250,000 280,000 ($30,000)