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Diamond Company has three product lines, A, B, and C. The following financial information is available: Item Product Line A Product Line B Product Line

Diamond Company has three product lines, A, B, and C. The following financial information is available:

Item

Product Line A

Product Line B

Product Line C

Sales

$30,000

$45,000

$12,000

Variable costs

$18,000

$24,000

$7,500

Contribution margin

$12,000

$21,000

$4,500

Fixed costs:

Avoidable

$4,500

$9,000

$3,000

Unavoidable

$3,000

$4,500

$2,000

Operating income

$4,500

$7,500

($500)

Assuming that Product Line C is discontinued and the manufacturing space formerly devoted to this line is rented for $6,000 per year, What will operating income for the company will become?

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