Birmingham company

Birmingham Company manufactures and sells a product, Product J. Results for last year for the manufacture and sale of Product J are as follows: Sales: 10,000 units at $160 each 1,600,000 Less costs: Variable production costs 950,000 Sales commissions: 15% of sales 240,000 Salaries of line supervisors 195,000 Traceable fixed advertising expense 180,000 Fixed general factory overhead (allocated to products on the basis of square feet occupied) 170,000 Total costs 1,735,000 Net loss $ (135,000) Birmingham Company anticipates no change in the operating result for Product J in the foreseeable future if the product is produced. Birmingham is reexamining all of its products and is trying to decide whether to discontinue the manufacture and sale of Product J. The company's total fixed factory overhead cost would not be affected by this decision. Assume that discontinuing the manufacture and sale of Product J will not affect the sale of other products. If the company discontinues Product J, the change in annual net income due to this decision will be a: $35,000 decrease. $145,000 increase. $170,000 decrease. $315,000 decrease