Question
Pottery Unlimited has two product lines: cups and pitchers. Income statement data for the most recent year follow:TotalCupsPitchersSales revenue$460,000$310,000$150,000Variable expenses355,000235,000120,000Contribution margin105,00075,00030,000Fixed expenses76,00038,00038,000Operating income (loss)$29,000$37,000$(8,000)Assuming the
Pottery Unlimited has two product lines: cups and pitchers. Income statement data for the most recent year follow:TotalCupsPitchersSales revenue$460,000$310,000$150,000Variable expenses355,000235,000120,000Contribution margin105,00075,00030,000Fixed expenses76,00038,00038,000Operating income (loss)$29,000$37,000$(8,000)Assuming the Pitcher line at Pottery Unlimited is dropped, total fixed costs remain unchanged, and the space formerly used to produce the line is rented for $45,000 per year, how will operating income be affected?
options:Decrease $15,000Increase $45,000Increase $44,000Increase $15,000
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