Thomas Company has the following data for one of their recliners. This information is for the deluxe recliner model:

Sales	$200,000
Variable Costs	90,000
Contribution Margin	110,000
Fixed Costs	150,000
Operating Income (loss)	$(40,000)

Assume that if the deluxe recliner model is dropped, there would be a savings of 30% of the current fixed costs.

If the deluxe model recliner is dropped from the product line, the companys overall net income would increase or decrease by how much?

ANSWER

• $90,000

• $(90,000)

• $65,000

• $(65,000)

• I DON'T KNOW YET