The Tom Holland Corporation is considering dropping its Doomspider toy due to continuing losses. Data on the toy for the past year follow:

Sales of 15,000 units	$	150,000
Variable expenses		120,000
Contribution margin		30,000
Fixed expenses		40,000
Net operating loss	$	(10,000	)

If the toy were discontinued, Tom Holland could avoid $8,000 per year in fixed costs. The remainder of the fixed costs are not avoidable.

The annual financial advantage (disadvantage) for the company from discontinuing the production and sale of Doomspiders would be:

Multiple Choice

• ($30,000)

• $10,000

• $18,000

• ($22,000)