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The income statement for Germain Appliances is divided by its two product lines, Toasters and Microwaves, as follows: Sales revenue Variable expenses Contribution margin Fixed
The income statement for Germain Appliances is divided by its two product lines, Toasters and Microwaves, as follows: Sales revenue Variable expenses Contribution margin Fixed expenses Operating income (loss) Toaster $640,000 $430,000 $210,000 $75,000 $135,000 Microwave $255,000 $210,000 $45,000 $75,000 $(30,000) Total $895,000 $640.000 $255,000 $150,000 $105,000 If Germain Appliances can eliminate fixed costs of $35,000 and increase the sale of Toasters by 6,500 units at a selling price of $32 per unit and a contribution margin of $13 per unit, then discontinuing the Microwaves should result in which of the following? O A. Decrease in total operating income of $39,500 O B. Decrease in total operating income of $74,500 O C. Increase in total operating income of $74,500 OD. Increase in total operating income of $39,500
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