Assume

KadenKaden$\text{'}$s

grocery store is deciding whether to eliminate the salad bar section of its stores. The product line income statement shows the following quarterly data for the salad bar$$ operations:

Sales revenue$=$ $ $860$ comma $000$$$860,000$

Fixed costs$=$ $ $90$ comma $000$$$90,000$

Variable costs$=$ $ $730$ comma $000$$$730,000$

$1.$

Only

$ $20$ comma $000$$$20,000$

of fixed costs can be eliminated if the salad bar is eliminated. The remaining

$ $70$ comma $000$$$70,000$

of fixed costs are unavoidable. What will happen to

KadenKaden$\text{'}$s

operating income if it discontinues the salad bars and does nothing with the freed$$ capacity?

$2.$

Management is thinking about replacing the salad bar section of the stores with a specialty olive$$ bar, which is projected to bring in

$ $140$ comma $000$$$140,000$

of contribution margin each quarter while incurring no additional fixed costs. What will happen to

KadenKaden$\text{'}$s

operating income if it replaces the salad bars with olive$$ bars?