9

Sheffield Machines has four product lines, one of which reflects the following results:

Sales$218000Variable expenses116000Contribution margin102000Fixed expenses116000Net loss$(14000)

If this product line is eliminated, 35% of the fixed expenses can be eliminated and the other 65% will be allocated to other product lines. If management decides to eliminate this product line, what will happen to the company's net income?

It will increase by $14000.

It will decrease by $61400.

It will decrease by $47400.

It will increase by $40600.