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The income statement for Slumber Company is divided by its two product lines, blankets and pillows, as follows: Sales revenue Variable costs Contribution margin Fixed
The income statement for Slumber Company is divided by its two product lines, blankets and pillows, as follows: Sales revenue Variable costs Contribution margin Fixed costs Operating income (loss) Blankets Pillows Total $640,000 $300,000 $940,000 (445,000) (241,000) (686,000) $195,000 $59,000 $254,000 (75,000) (75,000) (150,000) $120,000 $(16,000) $104,000 Slumber is considering eliminating the pillows product line. If this line is eliminated, Slumber will be able to eliminate $74,000 of total fixed costs. How would this business decision impact operating income? A. decrease of $59,000 in operating income B. increase of $15,000 in operating income C. increase of $134,000 in operating income D. increase of $74,000 in operating income
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