15

A company has three product lines, one of which has the following results:

Sales	$245000
Variable expenses	127000
Contribution margin	118000
Fixed expenses	170000
Net loss	$ (52000)

If this product line is eliminated, 60% of the fixed expenses will be eliminated and the other 40% will be allocated to other product lines. If management decides to eliminate this product line, the companys net income will

decrease by $118000.

decrease by $16000.

increase by $16000.

increase by $52000.