Salty Pretzels Corporation has three product lines, Cinnamon, Chocolate, and Sea salt. The following information is available:

Cinnamon Chocolate Sea Salt

Sales $100,000 $90,000 $88,000

Variable costs 76,000 48,000 79,000

Contribution margin $24,000 $42,000 $9,000

Fixed costs:

Avoidable 9,000 18,000 3,000

Unavoidable 6,000 9,000 9,700

Operating income $9,000 $15,000 $(3,700)

Requirements:

Should any product line be eliminated/discontinued? Explain why or why not. Show all calculations.

If the Sea salt product line is discontinued and the space formerly used to produce the Sea salt product line is rented for $15,000 per year, will the operating income increase or decrease and by how much? Show your calculations.