The income statement for Sweet Dreams Company is divided by its two product lines, blankets and pillows, as follows:

Sweet Dreams is considering eliminating the pillows product line. If they do so, they will be able to eliminate $76,000 of total fixed costs. How would that business decision impact operating income?

A) Increase $76,000 in operating income

B) Decrease $60,000 in operating income

C) Increase $42,000 in operating income

D) Increase of $16,000 in operating income

Sales revenue Variable expenses Contribution margin Fixed expenses Operating income (loss) Blankets Pillows Total $620,000 $300,000 $920,000 (465,000) (240,000) (705,000) $155,000 $60,000 $215,000 (76,000) (76,000) (152,000) $79,000 $(16,000) $63,000