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Johnson Company has three product lines: A, B and C. The following information is available: Product A Product B Product C Sales $100,000 $90,000 $45,000

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

Product A Product B Product C

Sales $100,000 $90,000 $45,000

Variable costs 76,000 48,000 33,000

Contribution margin 24,000 42,000 12,000

Avoidable fixed costs 9,000 18,000 4,000

Unavoidable fixed costs 6,000 9,000 8,700

Operating income(loss) $9,000 $15,000 $(700)

Johnson Company is thinking about dropping Product C because it is reporting a loss. Assume Johnson Company drops Product C and does not replace it. What will happen to operating income?

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