Percy Productions has three models: D, E, and F. The following information is available:

	Model D	Model E	Model F
Sales revenue	$68,000	$38,000	$24,000
Variable expenses	$32,000	$13,000	$14,000
Contribution margin	$36,000	$25,000	$10,000
Fixed expenses	$20,000	$20,000	$20,000
Operating income (loss)	$16,000	$5,000	$(10,000)

Percy Productions is thinking of discontinuing model F because it is reporting an operating loss. All fixed costs are unavoidable. Percy Productions discontinues model F and rents the space formerly used to produce product F for

$19,000

per year, what effect will this have on operating income?

A.

Decrease $9,000

B.

Increase $20,000

C.

Increase $9,000

D.

Decrease $ 20,000