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Westfall Watches has two product lines: Luxury watches and Sporty watches. Income statement data for the most recent year follow: Total Luxury Sporty Sales revenue

Westfall Watches has two product lines: Luxury watches and Sporty watches. Income statement data for the most recent year follow:

Total

Luxury

Sporty

Sales revenue

$530,000

$400,000

$130,000

Variable expenses

365,000

$245,000

120,000

Contribution margin

165,000

155,000

10,000

Fixed expenses

80,000

40,000

40,000

Operating income (loss)

$85,000

$115,000

$(-30,000)

Assuming the Sporty line is discontinued, total fixed costs remain unchanged, and the space formerly used to produce the line is rented for $30,000 per year, how will operating income be affected?

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