The Ashley Company sells three products and prepares the following income statements:

Product Lines

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A B C Totals

Sales $l00,000 $200,000 $400,000 $700,000

Less:

Variable Costs 70,000 205,000 205,000 480,000

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Contribution Margin 30,000 ( 5,000) 195,000 220,000

Fixed Costs 40,000 10,000 50,000 100,000

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Net Income ($ 10,000) ($ 15,000) $145,000 $120,000

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Assuming that 50% of the fixed costs of a product line would be eliminated if the line was eliminated, which (if any) of the product lines should be dropped

Select one:

a. Do not drop any product lineb. Drop A and Bc. Drop A onlyd. Drop B only