1. Denly Company has three products, A, B, and C. The following information is available:

Product A Product B Product C

Sales $60,000 $90,000 $24,000

Variable costs 36,000 48,000 15,000

Contribution margin 24,000 42,000 9,000

Fixed costs:

Avoidable 9,000 18,000 6,000

Unavoidable 6,000 9,000 5,400

Operating income $ 9,000 $15,000 $ (2,400)

Assuming Product C is discontinued and the space formerly used to produce Product C is rented for $12,000 per year, operating income will:

A. increase by $6,600

B. increase by $9,000

C. increase by $12,000