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Momentum Rollerblades has three product linesD, E, and F. The following information is available: D E F Sales revenue $70,000 $40,000 $31,000 Variable costs (20,000)

Momentum Rollerblades has three product linesD, E, and F. The following information is available:

D E F
Sales revenue $70,000 $40,000 $31,000
Variable costs (20,000) (5000) (11,000)
Contribution margin $50,000 $35,000 $20,000
Fixed costs (10,000) (15,000) (24,000)
Operating income (loss) $40,000 $20,000 $(4000)

The company is deciding whether to drop product line F because it has an operating loss. Assume that $22,000 of total fixed costs could be eliminated by dropping F. What effect would this decision have on operating income?

a. Operating income will decrease by $2000.

b. Operating income will increase by $2000.

c. Operating income will increase by $24,000.

d. Operating income will decrease by $24,000.

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