Problem 6 (10 points): Armor Sports, Inc. has two product lines--baseball bats and tennis rackets. The income statement data for the most recent year is as follows: Total Baseball BatsTennis Ra $950,000$600,00 $350,00 ales revenue ariable costs Contribution margin$460,000 ixed costs Operating income $400,000 $60,00 oss What is the effect of dropping tennis rackets line on the operating income of the company? (Assume that $20,000 fixed costs is avoidable and that there would be no adverse effect on other sales.) Problem 7 (10 points) Victoria, Inc, is considering replacing a machine. The following data are available: Replacement Old Machine Machine $90,000 $70,000 Original cost Useful life in years Current age in years Book value Disposal value now Disposal value in 5 years Annual cash operating costs 10 $50,000 $16,000 $14,000 $8,000 For each item above, indicate below whether it is a sunk cost(SC), irrelevant (), or relevant (R) to the decision