Michael's Sports, Inc. makes batting helmets and football helmets. The firm's income statement this year shows: Total Batting Helmets Football Helmets Sales revenue $900,000 $500,000 $400,000 Variable costs (480,000) (200,000) (280,000 Contribution margin $420,000 $300,000 $120,000 Fixed costs (230,000) (80,000) (150,000 Operating income (loss) $190.000 $220.000 $130.0001 39) The CEO is concerned about the operating loss for the football helmets and is considering dropping that product line. The production manager says that dropping football helmets will decrease the firm's fixed costs by $90,000. What is the effect of dropping football helmets line on the firm's operating income? A) Operating income will increase by $90,000 B) Operating income will increase by $120,000 C) Operating income will decrease by $150,000 D) Operating income will decrease by $30,000 40) If Michael's total fixed costs remain unchanged, but the space formerly used to produce the football helmets could be rented to another firm for $150,000 per year how would dropping football helmets affect operating income A) Operating income will increase by $30,000 B) Operating income will increase by $60,000 C) Operating income will decrease by $120,000 D) Unchanged 41) Ink-Weli makes pens for $1.00 each ($0.80 of variable costs and S0.20 of allocated fixed overhead per unit and sells them for $5.00 each. A charity offered to pay $3.00 per pen for a one-time special" order of 3,500 pens. Ink-Well has excess capacity, so the special order would not affect regular sales. How would operating income change if the special order is accepted? A) Increase of $7,000 B) Decrease of $7,000 C) Increase of $7.700 D) Decrease of $71,700