Sophie Company is considering closing one of its product lines. Current data on the product line are as follows. Sales revenue Variable costs Direct avoidable fixed costs* Indirect allocated fixed costs** Net income (loss) on the product line $25,000 19,000 7,000 5,000 ($6,000) *The direct avoidable fixed costs will be eliminated if the product line is closed. **The indirect allocated fixed costs will remain the same whether the product line is continued or closed. 4 IN ADDITION, if Sophie closes the product line, Sophie can sublease its production facility to another company and earn sublease revenue of $1,500 per year. Assume that Sophie decides to discontinue this product line. By how much will overall company net income change? O Company net income will DECREASE by $6,000 if the product line is discontinued. O Company net income will INCREASE by $1,000 if the product line is discontinued. O Company net income will INCREASE by $6,000 if the product line is discontinued. O Company net income will INCREASE by $2,500 if the product line is discontinued.

Sophie Company is considering closing one of its product lines. Current data on the product line are as follows. The direct avoidable fixed costs will be eliminated if the product line is closed. *The indirect allocated fixed costs will remain the same whether the product line is continued or closed. IN ADDrrION, if Sophie closes the product line, Sophie can sublease its production facility to another company and earn sublease revenue of $1, S00 per yea Assume that Sophle decides to discontinue this product line. By how much will overall company net income change? Company net income will DECREASE by $6,000 if the product line is discontinued. Company net income will INCREASE by $1,000 if the product line is discontinued. Company net income will INCREASE by $6,000 if the product line is discontinued: Company net income will INCREASE by $2,500 if the product line is discontinued