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Castillo Corporation has provided you with the following budgeted income statement for one of its products: Sales revenue Variable costs Contribution margin Fixed costs Operating
Castillo Corporation has provided you with the following budgeted income statement for one of its products: Sales revenue Variable costs Contribution margin Fixed costs Operating loss $700,000 430,000) 270,000 (300,000) Castillo has ust encountered environmental problems with the product and will be forced to drop the product line altogether. Castillo will be able to eliminate 75% of the fixed costs. What will be the impact on operating income of the company? A Operating income will decrease by $45,000. B. Operating income will increase by $225,000. O c. Operating income will increase by $45,000. D. Operating income will decrease by $225,000
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