DM Corporation has provided you with the follwing budgeted income statement for one of its products:

Sales	$700,000
Variable Expenses	($430,000)
Contribution Margin	$270,000
Fixed Expenses	($310,000)
Operating Loss	($40,000)

DM has encountered environmental problems with the product and will be forced to drop the product alltogether. They will be able to eliminate 60% of the fixed expenses. What will be the impact on the operating income for the company?

a) operating income decreases by $84,000

b) increases by $84,000

c) increase by $186,000

d) decrease by $186,000

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I simply calculated it as .60 x $310,000, which is $186,000. So since the fixed costs are decreasing, I think income is going to increase by c) $186,000

Is that right? It almost seems to be too easy to be that.