Q 29

Sheridan company has four product lines, one of which reported the following financial results for the current year: Sales $234000 Variable expenses 198000 Contribution margin 36000 Fixed expenses 81000 Net loss $(45000) If this product line is eliminated, 60% of the fixed expenses can be eliminated because they are direct fixed costs, and the remaining 40% of the fixed costs will be allocated to other product lines because they are allocated fixed costs. If management decides to eliminate this product line, the company's operating income is expected to O increase by $45000. increase by $12600. decrease by $12600. O decrease by $93600