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The income statement for Sweet Dreams Company is divided by its two product linesblankets and pillowsas follows: Blankets Pillows Total Sales revenue $620,000 $300,000 $920,000
The income statement for Sweet Dreams Company is divided by its two product linesblankets and pillowsas follows:
| Blankets | Pillows | Total |
Sales revenue | $620,000 | $300,000 | $920,000 |
Variable expenses | 465,000 | 240,000 | 705,000 |
Contribution margin | 155,000 | 60,000 | 215,000 |
Fixed expenses | 76,000 | 76,000 | 152,000 |
Operating income (loss) | $79,000 | $(16,000) | $63,000 |
If total fixed costs remain unchanged and Sweet Dreams drops the pillow line, what will happen to the operating income? Explain your answer.
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