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

Sales $215,000 Variable expenses 125,000 Contribution margin 90,000 Fixed expenses 130,000 Net loss $ (40,000)

If this product line is eliminated, 60% of the fixed expenses can 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

Group of answer choices

decrease by $90,000.

increase by $12,000.

decrease by $12,000.

increase by $40,000.