The income statement for Champion Parts is divided by its two product lines, Part L2 and Part C6, as follows:

Part L2

Part C6

Total

Sales revenue

$680,000

$275,000

$955,000

Variable expenses

$450,000

$210,000

$660,000

Contribution margin

$230,000

$65,000

$295,000

Fixed expenses

$75,000

$75,000

$150,000

Operating income (loss)

$155,000

$(10,000)

$145,000

3) If Champion Parts can eliminate fixed costs of $40,000 by dropping the Part C6 line, then dropping it should result in which of the following?

A) Decrease in total operating income of $65,000

B) Increase in total operating income of $25,000

C) Increase in total operating income of $65,000

D) Decrease in total operating income of $25,000