Darren Company has three product lines: D, E, and F. The following information is available. D E F Sales revenue $70,000 $40,000 $28,000 Variable expenses $17,000 $21,000 $12,000 Contribution margin $30,000 $ 19,000 $16,000 Fixed expenses $12,000 $15,000 $17,000 Operating income (loss) $18,000 $4,000 $(1,000) Darren Company is thinking of dropping product line F because it is reporting an operating loss. All fixed expenses are unavoidable. Assuming Darren Company drops product line F and does not replace it, what affect will this have on operating income? . . . O A. Decrease $16,000 O B. Decrease $1,000 O C. Increase $1,000 O D. Increase $16,000Suppose McMaster is considering dropping its sweet potato fries product line. Assume that during the past year, the sweet potato fries product line income statement showed the following: (Click the icon to view the income statement data.) Fixed manufacturing overhead costs account for 40% of the cost of goods, while only 30% of the operating expenses are fixed. Since the sweet potato fries line is only one of McMaster's french frie only $720,000 of direct fixed costs (the majority of which is advertising) will be eliminated if the product line is discontinued. The remainder of the fixed costs will still be incurred by McMaster. If the company decides to drop the product line, what will happen to the company's operating income? Should McMaster drop the product line? . . . Prepare an incremental analysis to show how dropping the sweet potato fries product line will affect McMaster's operating income. (Use parentheses or a minus sign for a decrease in operating income.) McMaster -X Analysis of Dropping the Sweet Potato Fries Product Line Data table Expected decrease in revenues Expected decrease in expenses: Sales. . . . $ 7,450,000 Variable expenses Cost of goods sold . . . . . . . . 6,200,000 Fixed expenses Gross profit . . . . . . . . . . . . . .. 1,250,000 Expected decrease in total expenses 1,500,000 Operating expenses . . . . . . . . Expected increase (decrease) in operating income $ (250,000) Operating loss. . . . . . . . . . . . Print Done